CFTC Has Not Yet Approved LedgerX Physically-Settled Bitcoin Futures

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  • The news of LedgerX’s physically settled bitcoin futures contracts launch broke yesterday, but currently it is unclear whether the product has gone live
  • LedgerX has deleted a tweet about the product launch, and there are no official rule filings about the contracts yet
  • A source with direct knowledge of the matter told The Block that LedgerX “hit a snag with the CFTC.”

On Wednesday BTC derivatives provider LedgerX revealed that it had launched physically-settled Bitcoin futures contracts. This makes the company the first to offer such a product in the U.S. This also catapults the company to the forefront, ahead of Bakkt, TD Ameritrade-backed ErisX who are both direct competitors. The product is available to all U.S. residents, institutional and retail. Interested investors simply need to complete the know-your-customer (KYC) verification and then they are cleared to trade.

According to LedgerX CEO Paul Chou, this is possibly the first instance where a regulated company permits investors to deposit BTC as collateral. As a result, investors do not have to wait for bank transfers or any other time-consuming delays that are part and parcel of the U.S. banking system.

Suspicious behavior

LedgerX deleted a tweet it wrote yesterday, which said: “It’s official: we’re live with retail trading on Omni! If you signed up for our waitlist, you’ll hear from us soon. […].”

Today, it tweeted: “LedgerX Omni (DCM) has launched! Sign up for the waitlist here: […].”

The Commodity Futures Trading Commission (CFTC) told The Block today that LedgerX does not have the necessary derivatives clearing organization (DCO) license to trade futures. Its 2017 DCO license approval permitted the clearing of swaps, not futures.

Last market insiders noted it was not clear whether the futures would go live anytime soon. There were no official rule filings about an approved futures contracts either on the LedgerX website or on the primary U.S. derivatives regulator, the CFTC website. A “derivatives specialist” named Thomas G. Thompson also tweeted yesterday: “The CFTC does not show any futures contracts certified by #ledgerX.” There was also no futures volume listed on their publicly available market data.

“Don’t see any reported trade volume either. Vaporware launch,” one industry insider questioned.

Final stages?

The regulation does state that “the Commission may stay the running of the 180-day review period if an application is materially incomplete, in accordance with section 6(a) of the Act,” but there is no indication whether the CFTC took this action.

That said, LedgerX’s DCO application “appears to be in the very final stages of the approval process,” the senior official said.

Paul Chou told that there is little difference between swaps and futures products.

“Basically, it’s just a total technicality that a swap and a future are different things and … it’s like, it’s actually a little different,” he said. “The difference between futures and swaps is ridiculous, it’s the same product.”

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