LedgerX launches physically delivered bitcoin options and custody

Startups • July 31, 2019, 9:33AM EDT
The Block

After obtaining a so-called designated contract market license (DCM) from the Commodities Futures Trading Commission (CFTC) in June, LedgerX has now launched physically delivered bitcoin options and custody for retail investors. According to a statement from the company, the company's OMNI platform soft-launched last week and is now fully operational and serving both retail and institutional players.

The OMNI platform is part of a retail push, supporting the trading of swaps, options and futures for retail users. The firm told The Block in April that it hoped to offer the first bitcoin futures product of its kind. Crypto exchange Bakkt was looking to execute a similar project, according to a leaked slide deck from the company, but it seems LedgerX has won the race. 

However, Bakkt is seeking a license to operate as a trust, while LedgerX went the route of DCM and DCO licenses, which some have said means its contracts are likely to be fully collateralized, so traders can’t legally trade them on margin.

Physically delivered futures pay out to customers in bitcoin at the expiration of a contract. In comparison, cash-settled futures are paid in USD. CME, a market-leader for futures, currently only offers cash-settled products. Some have said these products are more prone to manipulation.