LedgerX Cleared for Bitcoin Options Trades

Announcements, Blockchain, FinTech, Innovation, Investing, News, Regulation | July 7, 2017 By:

The US Commodity Futures Trading Commission (CFTC) has granted blockchain startup LedgerX the ability to trade and clear options on bitcoin, proclaiming it a full status Swap Execution Facility (SEF).

Now LedgerX awaits a decision on a second request to become a Derivatives Clearing Organization (DCO). If the DCO application is also approved, Ledgerx would be the first federally-regulated bitcoin options exchange and clearinghouse to list and clear fully-collateralized, physically-settled bitcoin options for the institutional market.

SEFs are platforms that operate under the CFTC’s regulatory oversight for the trading of swaps. There are currently 25 SEFs registered with the CFTC. LedgerX is an institutional trading and clearing platform which has been waiting for full regulatory approval from the CFTC to trade and clear options on bitcoin.

“We are pleased to have received full registration as a SEF from the CFTC for the trading of digital currency derivatives,” said LedgerX CEO Paul Chou. “We look forward to working with the CFTC on finalizing the DCO registration.”

The CFTC said that in its review of the LedgerX application and associated exhibits, it found that the company demonstrated compliance with the Commodity Exchange Act (CEA) and its regulations applicable to SEFs. Under the terms and conditions of the Order, LedgerX would be required to comply with all provisions of the CEA and all requirements in the CFTC’s regulations that are applicable to SEFs.

The CFTC added that LedgerX also must comply with all representations and submissions made by it in support of its application for registration as a SEF, including, but not limited to, its representations that it will not list an intended to be cleared swap until it has a clearing agreement with a derivatives clearing organization registered under Section 5b of the CEA and it will not list a swap that is not intended to be cleared until it submits to the CFTC revisions of its rulebook and other pertinent registration materials, pursuant to the provisio