The US Commodity Futures Trading Commission (CFTC) had recently affirmed that the LedgerX has not yet been approved by the entity to offer bitcoins futures contracts liquidated physically. The statement contradicts the claims of the company, which claimed to have already released the first bitcoin futures contracts. Since the Declaration of the CFTC, LedgerX officials have acknowledged that the release had never happened.
What is LedgerX
The LedgerX has the proposal to offer a new product for institutional and retail investors. The idea is to allow anyone that pass through the processes of know-your-customer (KYC) to negotiate contracts, not just institutional clients with millions in assets.
The CEO of LedgerX, Paul Chou, said in an interview with CoinDesk that retail customers can negotiate the product using the company’s new Omni platform., which would have gone into operation. Institutional clients can trade futures with any other product of LedgerX.
Although LedgerX isn’t the first vendor of bitcoin futures in the United States, is the first to offer physical futures. That is to say, the difference is that clients receive the real bitcoin in which they bet when contracts expire, instead of the equivalent in cash.
In addition, clients do not need to put dollars to bet on the product. Chou explained that traders can buy contracts using bitcoin. He believes this is the first time that a regulated company allows customers to deposit bitcoins as a guarantee to a contract.
Why is it important for the market?
In this way, clients can participate and do not need to wait for bank transfers or other limitations of the U.S. banking system. “As the deposits are held in bitcoin, it is not necessary to use the U.S. banking system. That’s why the physical solution is very important”, he said. The executive had also defined the project as one of the most unique use cases of the bitcoin, in which the cryptocurrencies are used as the only guarantee.
This is possible using the physically established contract. “ As a digital commodity, the bitcoin negotiates in any time, every day. So, if you want to negotiate on Sunday night, it is not required that the banking system is open. “
The LedgerX revealed it was looking to offer futures of bitcoin in April. It had issued a request to the US Commodity Futures Trading Commission (CFTC) for the necessary licenses in November 2018. The CFTC granted LedgerX a license of designated contract market (DCM) in July, giving the platform the final approval it needed.
The company began offering bitcoins derivatives settled physically in 2017. However, their options products and swaps were initially focused on institutional clients.
Since then, LedgerX has been working to ensure that any person can negotiate their products, said Chou. “We are engaged in this business for the last six years and we have managed to involve not only the institutions, but also spend a lot of time educating regulators on why this is important,” he said.
The executive added that “cryptocurrencies are for everyone and we do not intend to offer only to hedge funds or institutional clients.”