The U.S. Commodity Futures Trading Commission (CFTC) just announced that LedgerX has been granted official status as a Swap Execution Facility (SEF).
This was a surprising development for many and represents a major hurdle cleared for LedgerX.
This is puts LedgerX well on it's way to becoming the first ever federally recognized exchange with the ability to trade Bitcoin option contracts.
Yes, you read that right, this news is paving the way for Bitcoin options trading for the masses.
The SEF status designation puts LedgerX on a list of only 25 financial institutions with SEF approval, a list which includes heavy weights like Bloomberg and the Chicago Mercantile Exchange.
Although this news represents a major hurdle cleared for LedgerX, it doesn't represent the final hurdle in the process...
What's next?
The next step is for LedgerX to get approval from the CFTC as a Derivatives Clearing Organization, or (DCO).
That is the big one.
If/once that happens, LedgerX would be the first ever federally regulated Bitcoin options exchange and clearinghouse to list and clear fully-collateralized, physically-settled Bitcoin options.
What changed?
Up until now, LedgerX wasn't able to gain approval because it didn't have the capital required to qualify.
However, after raising roughly $11.4 million in May, LedgerX has now garnered enough support to fully collateralize it's trades.
CEO of LedgerX, Paul Chou, had this to say at the time regarding the fund raising:
"These investments will help further our application to become a regulated exchange and clearinghouse for Bitcoin options."
So far, he was exactly right as LedgerX gained SEF status and is well on it's way to gaining DCO status.
What does this all mean?
This is another step in bringing Bitcoin and cryptocurrencies to the masses.
Some are strongly against any kind of regulation on Bitcoin and the crypto market, but in order to get institutional type money invested in the space there needs to be at least some sort of regulation of the market.
The big question is....
What will a derivatives market for Bitcoin (and eventually other cryptocurrencies) do to their prices?
Let me know what you think in the comments section below.
Stay informed my friends!
Sources:
https://news.bitcoin.com/ledgerx-receives-approval-regulated-bitcoin-swap-exchange/
https://cointelegraph.com/news/bitcoin-exchange-receives-us-commodity-futures-trading-commission-approval
Image Sources:
https://news.bitcoin.com/ledgerx-receives-approval-regulated-bitcoin-swap-exchange/
http://www.pionline.com/article/20160524/ONLINE/160529950/cftc-tightens-cross-border-swaps-rules-for-foreign-based-subsidiaries-of-us-firms
https://www.leaprate.com/cryptocurrency/exchange/ledgerx-closes-11-million-series-b-push-forward-regulated-bitcoin-options/
