Right now, there is no U.S crypto firm offering traders a physically delivered Bitcoin Futures contract.
Also, while startups such as Bakkt, Seed CX and ErisX are seeking regulatory approval to do so, another firm with more chances of securing the needed license have applied.
Cryptocurrency derivatives provider, LedgerX on Monday announced plans to emerge as the first U.S. crypto firm to issue physically settled bitcoin futures contracts.
Unlike the existing cash-settled contracts being sold by CBOE and CME since December 2017, LedgerX applied for designated contract market (DCM) license. Acquiring such license will reportedly authorize them to issue Bitcoin Futures contracts settled with physical bitcoin instead of cash.
Also, unlike other contracts restricted to institutional investors with $10 million and above, the offering can also target retail investors.
Sharing her thoughts on the scope of clients they hope to serve with the new offering, LedgerX Chief Risk and Operating Officer, Juthica Chou, said,
“We’ll be able to service customers of any size; we won’t be restricted to [institutional clients],”
Upon receiving the necessary approval of DCM, LedgerX disclosed they would offer bitcoin, bitcoin futures and bitcoin option to retail investors using their newly developed platform called “Omni.”
Omni is reportedly set to act as a provider for both custody and trading services using both the LedgerX existing institutional liquidity and the infrastructure which had its first regulatory approval in 2017.
When LedgerX sold its first batch of physically delivered derivatives in October 2017, they traded $1 million within the first week, prompting the firm to file for a license with the U.S CFTC.
Now with Bitcoin Futures contract is sight, Chou added,
“For us, this is a philosophically important move because bitcoin is available to everyone and we… really wanted to make our derivatives products available to all investors as well.”
Why LedgerX Could Get Regulatory Approval Faster Than Other Competitors
The fact that LedgerX is already onboarding a suite of beta-testing clients for the Omni platform nearly six months after it submitted the DCM license application in November 2018 shows the startup is actively eyeing approval.
The firm believes that the level of success it had recorded in providing physically settled derivatives, give it a better chance of securing approval than other startups who are trying to launch without prior experience.
“We’re custodying [bitcoin] in the same way that we currently do, we’ve obviously been live and operational for more than a year and a half, and we have a license from the CFTC, the DCO license, that allows us to custody bitcoin.”
Therefore LedgerX, although on the same queue for approval like their counterparts, may nick it just ahead of all of them to become the first firm to birth the first U.S physically delivered Bitcoin Futures contracts.