CFTC: LedgerX ‘Not Approved’ to Launch ‘Physical’ Bitcoin Futures
In a statement received by CoinDesk Thursday, the U.S. Commodities Futures Trading Commission (CFTC) says LedgerX has “not yet been approved by the Commission” to offer physically settled bitcoin futures, contradicting the company’s claims.
Any U.S. resident with a government-issued I.D. can now trade
futures contracts for real bitcoin.
Revealed exclusively to CoinDesk, LedgerX has officially launched the first physically-settled bitcoin futures contracts in the U.S., beating the Intercontinental
Exchange’s Bakkt and TD Ameritrade-backed ErisX to the punch.
Perhaps more importantly, LedgerX is offering the new product to both institutional and retail investors, allowing anyone who can pass know-your-customer (KYC) processes to trade the contracts, not just institutional clients with millions in assets.
LedgerX CEO Paul Chou told CoinDesk that retail customers can trade the product using his company’s new Omni platform, which recently went live, while institutional clients can trade futures as with any of LedgerX’s other products.
While LedgerX is not the first bitcoin futures provider in the U.S., it is the first to offer physical futures, meaning customers receive the actual bitcoin they bet on when the contracts expire, rather than the
Moreover, customers don’t need to put U.S. dollars in to bet on the product. Chou explained that traders can buy contracts using bitcoin.
“Not only are they delivered physically in the sense that our customers can get bitcoin after the futures expires, but also they can deposit bitcoin to trade in the first place,” he said. “Cash-settled is cash-in and cash-out, we’re bitcoin-in and bitcoin-out.”
He believes this is the first time that a regulated company is able to allow customers to deposit bitcoin as collateral for a contract.
Because of this, customers do not need to wait for bank transfers or on other limitations of the U.S. banking system to participate, he said.
“If you imagine somebody that deposits bitcoin, they would not have to use the U.S. banking system at all. That’s why physically-settled is very important,” he said. “I think [it’s] one of the most unique use cases for bitcoin, where you’re using cryptocurrencies as the only collateral.”
This is possible using the physically-settled contract, he said, adding:
“As a digital commodity, bitcoin trades 24/7/365 and our customers expect that from us, so if you trade Sunday night, the banking system did not have to be open.”