The Commodity Futures Trading Commission (CFTC) has cleared bitcoin derivatives provider LedgerX to offer physically settled bitcoin futures contracts.
The CFTC said Tuesday it had approved LedgerX’s application for a designated contract market (DCM) license, meaning the company can now offer the 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. (While Bakkt’s own futures contracts have been self-certified, the firm is waiting for the New York Department of Financial Services to license its warehouse).
Unlike the cash-settled bitcoin futures listed by the Chicago exchanges Cboe and CME, in physically settled futures the buyer receives the underlying commodity when a contract expires, rather than the fiat equivalent.
Monday’s approval means that New York-based LedgerX can not only list these bitcoin futures contracts but crucially can offer its products to retail clients, not just institutional ones.
No timeline was provided for when LedgerX might start to offer futures. but chief operating and risk officer Juthica Chou told CoinDesk that the company was looking to be the first provider of this product in the U.S.
“There’s no doubt that we’re looking to be first, we’re looking to be the incumbent,” she said. “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].”
While Bakkt has previously announced that it would be testing its own physically-settled bitcoin futures contracts in July,