US CFTC grants Bitcoin trading platform LedgerX LLC DCO License


The US financial regulator has granted Bitcoin trading platform LedgerX LLC DCO License. What will now be changed for the clearing and trading platform?

27 July, AtoZForex The US Commodity Futures Trading Commission (CFTC) has issued the approval for Derivatives Clearing Organization (DCO) license for the LegderX. The LedgerX is an institutional trading and clearing platform.

US CFTC grants Bitcoin trading platform LedgerX LLC DCO License

LedgerX has acquired an approval from CFTC to trade and clear options on cryptocurrencies. On the 24th July, the trading and clearing platform has announced this news. The license from the CFTC will allow the institution to provide trading and clearing services for fully collateralized cryptocurrency swaps.

Moreover, on the 6th of July, the US CFTC has also provided LedgerX an order of registration as a Swap Execution Facility. In fact, LedgerX, which operates in the market from 2013, already has received a temporary approval as a Swap Execution Facility in 2015.

In spite of the approval, the CFTC has stressed that LedgerX’s authorization does not signal that regulator supports cryptocurrency. It has stated:

“This authorization to provide clearing services for fully-collateralized digital currency swaps does not constitute or imply a Commission endorsement of the use of digital currency generally, or Bitcoin specifically.”

In addition, the CFTC has stated that it had issued a letter on July 24. The letter contributed to the exemption of LedgerX from “certain regulations”. The regulator has taken this step due to the firms’ fully collateralized clearing model.

LedgerX LLC DCO License benefits

Now with its DCO license, LedgerX will be able to provide specific services on the platform. These include obtaining and hedging cryptocurrencies by using exchange-traded and centrally cleared option contracts. Thanks to the CFTC approval, the company will have the opportunity to lost one- to six-month options contracts for Bitcoin.

It also will be able to add contracts for other cryptocurrencies, such as ETH options. Paul L. Chou, the CEO of LedgerX, has commented on the news:

“A US federally regulated venue for derivative contracts settling in digital currencies opens the market to a much larger customer base. We are seeing strong demand from institutions that previously could not participate in the Bitcoin market due to compliance restrictions against unregulated venues.

In particular, there is a desire for fund managers to hold financial instruments that are not correlated with the broader equity market, and digital currencies meet that need.”

The clearing and trading platform now plans to provide required services for institutional investors. These include surveillance and transparency.

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