According to Coindesk's April 15 report, cryptocurrency derivatives provider LedgerX plans to become the first US company to offer physical settlement of bitcoin futures contracts.
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The company announced on Monday that it has applied for a designated contract market (DCM) license, which will allow LedgerX to provide customers with physical settlement of bitcoin futures products. Unlike the cash-settled bitcoin futures offered by the CME Group and the previous Chicago Board Options Exchange (Cboe), customers will receive the actual bitcoin after the contract expires instead of the equivalent dollar. .
Judica Chou, LedgerX's chief risk officer and operations officer, revealed that it is more noteworthy that LedgerX can target retail investors with new products. He said to Coindesk:
“We will be able to serve customers of any size and we will not be limited to institutional clients.”
Once approved, LedgerX will offer bitcoin spot, bitcoin options and bitcoin futures services to retail customers via a new platform called Omni. Omni, built on Ledgerx's existing infrastructure, will serve as a provider of hosting and transaction services. Ledgerx's original platform was first approved by regulators in July 2017, but the platform was only available later that year.
Chou said the new platform will also leverage LedgerX's existing institutional mobility pool to serve retail customers from day one. He said that launching a retail platform that provides futures products has always been their plan. LedgerX first launched a physical settlement of derivative products in October 2017, and the transaction volume in the first week reached $1 million. She added:
"Once the platform proved to be stable and we had the rhythm, we applied for a license from the Commodity Futures Trading Commission (CFTC). For us, this is a philosophical and important move because Bitcoin is for everyone. We really want our derivatives to be available to all investors as well."
Chou said that the company applied for a futures contract sales license in November 2018 and has been in a "constructive dialogue" with the CFTC since then. However, she did not comment on when the CFTC could approve LedgerX's application and what customer feedback was expected from the company.
The CFTC has issued two licenses to LedgerX, allowing the company to act as a Swap Execution Facility (SEF) and a Derivatives Clearing Organization (DCO). The former is the company's trading platform, the latter is a clearing house.
Therefore, LedgerX's DCM application is just an additional license on top of its existing permissions. Chou said that in operation, the company has begun to provide futures services. She continued:
“We are providing Bitcoin hosting services in the current way. Obviously, we have been in operation for more than a year and a half, and we have a DCO license from the CFTC that allows us to provide Bitcoin hosting services.”
Since its inception, LedgerX has provided organizations with regulated physical settlement of bitcoin swaps and options products, and claims that its corporate customers have reached as many as 200.
Although the Chicago Mercantile Exchange and the Chicago Board Options Exchange began offering cash-settled bitcoin futures in December 2017, no company has so far introduced physical settlement of bitcoin futures, although this is not due to lack of experimentation.
Several big companies plan to launch physical settlement of bitcoin futures contracts, including Bakkt established by the Intercontinental Exchange, the parent company of the New York Stock Exchange; Bain Capital Ventures Supported crypto exchange Seed CX; and startup company ErisX supported by brokerage TD Ameritrade.
However, all of these companies are also awaiting regulatory approval, giving LedgerX the opportunity to be the first company to introduce a line of products. Chou finally said:
“This is a natural evolution. It stems from the fact that we have been in the physical market for more than a year and a half, so this is just a natural extension. We are always excited to be the first to eat crabs. people."