The U.S. Commodity Futures Trading Commission (CFTC) announced today that it has issued a registration order to LedgerX LLC (LedgerX), granting it status with the CFTC as a Swap Execution Facility (SEF).
LedgerX is an institutional trading and clearing platform which has been patiently waiting for full regulatory approval from the CFTC to trade and clear options on bitcoin.
It is now the first federally regulated bitcoin options exchange and clearing house which will list and clear fully-collateralized, physically-settled bitcoin options for the institutional market.
Back in May, Ledger Holdings, the parent company of LedgerX, closed $ 11.4 Million in Series B financing. Led by Miami International Holdings Inc. and Huiyin Blockchain Venture Investments, this funding will go to support LedgerX’s plan to develop its regulated exchange and clearing house for bitcoin and other digital currencies.
On December 16, 2016, Ledger Holdings and Miami International Holdings, Inc. (MIH), the parent holding company of the MIAX Options Exchange, jointly announced that MIH had completed an investment in Ledger Holdings. Early investors in Ledger Holdings include Google Ventures and Lightspeed Venture Partners.
SEFs are platforms that operate under the CFTC’s regulatory oversight for the trading of swaps. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Act) authorized the creation of SEFs.
CFTC grants registration to LedgerX to trade options on bitcoin
LedgerX is a limited liability company registered in Delaware with its primary place of business in New York, NY.
Source:CFTC
“fully-collateralized, physically-settled bitcoin options”
Yeah right, and I’ve a bridge on Brooklyn to sell too.
This is very unfortunate development for cronies & crooks to destroy by centralization, the decentralization of what was supposed to be a true distributed system.
“Physically settled” means that if you exercise a call option or if a put option is exercised on you, you take delivery of the underlying asset (bitcoins) rather than just getting cash for the value of the underlying (“cash settled”).
I suspect that “fully collateralized” in this context means that you have to deposit the bitcoins if you want to sell a call option or exercise a put option, so that the exchange doesn’t have to come after you in order to get fulfillment of your side of the contract. They might also mean by this that selling a put requires depositing cash equal to the strike price.
I truly hope you’re correct. But the cynical side in me based on historical understanding of how commodity exchanges of the world became corrupted worries that: The Goldman Saches, JPMorgans & HSBCs of the world could enter & create financial instruments based on this to destroy any shreds of honesty.