The Commodity Futures Trading Commission (CFTC) approves bitcoin derivatives provider LedgerX to offer physically settled bitcoin futures contracts, as announced by CFTC on Tuesday.
As per the announcement, CFTC has approved LedgerX’s application for a designated contract market (DCM) license. This license will now enable the company to offer new futures contracts. LedgerX is the second company to receive approval to offer physically settled bitcoin futures.
Other firms such as Intercontinental Exchange’s Bakkt, Seed CX and ErisX plan to enter this market. Notably, Bakkt is planning its own futures contracts have been self-certified and is waiting for the New York Department of Financial Services to license its warehouse.
While the cash-settled bitcoin futures listed on Chicago exchanges Cboe and CME which are physically settled, here the buyer receives the underlying commodity when a contract expires, rather than the fiat equivalent. With Monday’s approval, the New York-based LedgerX will be able to list these bitcoin futures contracts not just for institutional ones but for retail clients as well.
As of now, LedgerX hasn’t provided a timeline for the offering, however, the chief operating and risk officer Juthica Chou stated that the company was looking to be the first provider of this product in the U.S. She added:
“There’s no doubt that we’re looking to be first, we’re looking to be the incumbent. We think we’re better positioned and we want to be there to serve customers of all sizes.”
LedgerX would follow the same self-certification process that it already underwent to offer swaps and options, Chou said, adding:
“Ultimately the products are not that economically different than what we’re already offering … but this would open up to a broader [market].”
Moreover, Bakkt has had announced that it would be testing its own physically-settled bitcoin futures contracts in July, though a launch date is yet to be announced. Seed CX and ErisX have likewise not yet announced when they would launch their futures products.