The most comprehensive analysis tells you: Why LegderX did not launch bitcoin futures trading on time

According to Coindesk's August 2 report, LedgerX said on Thursday that it did not launch Bitcoin futures as scheduled. At the same time, the US Commodity Futures Trading Commission (CFTC) also said before that it did not approve the exchange of bitcoin futures trading on the exchange.

Screen Shot 2019-08-02 at 12.05.50 PM (Source: Coindesk )

LedgerX once told CoinDesk that it plans to launch bitcoin futures trading on Wednesday. If the plan goes well, it will become the first exchange in the US to provide physical settlement of bitcoin futures. (The physical settlement of bitcoin futures is in cryptocurrency instead of Contract for payment in cash).

Paul Chou, CEO of LedgerX, told CoinDesk on Monday:

LedgerX's on-line bitcoin futures trading is delivered in kind, customers can get bitcoin after the expiration of the futures, and can also be deposited into bitcoin for trading.

After CoinDesk reported on this, on Thursday morning, Michael Short, chief communications officer of the US Commodity Futures Trading Commission, said in an e-mailed statement:

LedgerX has not yet been approved by the committee.

LedgerX's data page shows that the exchange only conducted options and swaps on Wednesday and there is no futures trading. Subsequently, CoinDesk contacted LedgerX, and the company's chief operating and risk officer, Juthica Chou, admitted that he did not run futures contracts.

Juthica insisted that she and Paul talk about the on-line bitcoin futures trading on Wednesday, only involving LedgerX's retail platform Omni. She said that Omni is actively providing swaps and options products to traders.

She said:

We are also running related products and are pushing these products into the retail market.

LedgerX online futures trading still needs approval

Last month, the US Commodity Futures Trading Commission approved LedgerX as the designated contract market (DCM), one of the two approvals the company needed to launch futures products. The other is the revision of its Derivatives Clearing House (DCO) license.

LedgerX is currently authorized to liquidate swap contracts, but has not authorized liquidation of futures contracts.

The US Commodity Futures Trading Commission issued a press release on June 25 stating:

LedgerX has requested the Commodity Futures Trading Commission to revise its registered DCO to allow it to liquidate futures listed on DCM. Previously, LedgerX's clearing range was limited to swap transactions.

According to the US Commodity Futures Trading Commission (title 17 prat 39.3), the agency has 180 days to approve or reject the DCO application.

Paul Chou told CoinDesk on Thursday:

The US Commodity Futures Trading Commission said that we can liquidate swap contracts, and they later said that LedgerX should actually liquidate futures contracts, so we have been waiting for this revision.

Juthica hinted that since the 180-day deadline has passed, they have not received objections from the Commodity Futures Trading Commission, so they believe that they can go online. she says:

We submitted the amendment on November 8, 2018, and it has been more than 180 days now. We received an email confirming that the amendment does not require additional terms.

However, a senior US Commodity Futures Trading Commission official said that LedgerX needs to be explicitly approved. The official, who asked not to be named, said:

Each newly revised DCO application must be approved by the committee. No decision does not constitute approval and the entity cannot self-certify.

LedgerX has entered the final stage of launching physical futures trading?

The provision clearly states that “in accordance with Article 6(a) of the Commodity Futures Trading Commission Act, if an application is incomplete, the Commission may maintain a 180-day approval period.” But there is no indication of US commodity futures trading. Whether the committee has approved LedgerX's application.

The senior official said that despite this, LedgerX's DCO application "appears to be in the final stages of the approval process."

Paul Chou told CoinDesk that there is no difference between swaps and futures products.

He said:

In essence, the difference between swaps and futures is entirely a technical issue. I think futures and swaps are the same product.

Update (UTC time August 1, 2019, 19:30): LedgerX's news representative Ryan Gorman told CoinDesk that he would no longer speak on behalf of the company as of Thursday, because he was "worried" about the events that occurred in the past 24 hours. .

Update (UTC time August 1, 2019, 16:10): On Thursday afternoon, LedgerX CEO Paul Zhou said in a series of tweets that the US Commodity Futures Commission asked the company to review the tweets it sent. He threatened to sue the regulator on the grounds of "anti-competitive behavior, breach of duties and violation of regulatory requirements."