The Commodity Futures Trading Commission (“CFTC”) has announced an approval of LedgerX’s application to offer bitcoin options trading.
“After review of the LedgerX application and associated exhibits, the CFTC has determined that LedgerX demonstrated compliance with the CEA and the CFTC’s regulations applicable to Swap Execution Facilities (SEF),” CFTC said.
LedgerX applied for SEF status all the way back in 2014 with the CFTC giving them a temporary license in 2015 which has now been finalized.
They also applied to become a derivatives clearing organization (DCO), but the DCO license is still under review. CFTC’s approval yesterday, however, means LedgerX becomes the first regulated bitcoin options trading company.
They recently announced a Series B round led by Miami International Holdings and Huiyin Blockchain Venture Investments. Raising $11.4 million to establish a regulated bitcoin options clearing house and exchange.
It’s not clear whether this approval makes a DCO license more likely, but it is the first decision under a settled Trump administration that affects this space.
American regulators, including CFTC, have been criticized for being far too strict in giving the green light to regulated companies to offer basic trading instruments and facilities, such as options and margins.
Many hoped that the new Trump administration will change that because it has a number of bitcoin supporters in fairly high positions as well as because it has a general attitude of lower regulations.
CFTC’s decision yesterday, after a nearly three years long process, may suggest that is indeed the case, but we’ll have to wait and see if they go all the way and offer the DCO license too.
That would allow LedgerX to clear bitcoin transactions off the counter for financial institutions and other investors increasing the efficiency and liquidity of the bitcoin market.
Once that road is paved, other digital currencies might follow too, especially now that their combined market cap has risen to around $100 billion, higher than many banks, and not too far off from giants such as Apple or Google.