LedgerX Gets U.S. Approval as First Derivatives Clearing Organization

FinTech, ICO News, Innovation, Investing, News, Regulation | July 24, 2017 By:

The U.S. Commodity Futures Trading Commission (CFTC) has given permission to New York-based LedgerX to exchange and clear any number of cryptocurrencies.

The CFTC previously granted LedgerX the ability to trade and clear options on bitcoin, proclaiming it a full status Swap Execution Facility (SEF). By naming it a Derivatives Clearing Organization (DCO), LedgerX is the first federally-regulated bitcoin options exchange and clearinghouse to list and clear fully-collateralized, physically-settled bitcoin and other crypto options for the institutional market.

LedgerX is an institutional trading and clearing platform which has been waiting for three years to achieve full regulatory approval from the CFTC to trade and clear options on bitcoin. The approval has global implications as a model for what exchanges and clearinghouses should look like.

The DCO license requires LedgerX to survey its institutional investors and work to create transparency for the regulators. The potential customers include banks, broker dealers, futrues commission merchants, commodity pools and high net worth investors. The entities can now enter into contracts using values derived from the underlying cryptocurrency assets.

Reports indicate LedgerX will target roughly five cryptocurrencies for its exchange and clearinghouse, evaluating candidates based on market cap and functionality. Initial coin offering tokens will not be considered.