Ledgerx Approved to Offer Regulated Bitcoin Derivatives to Retail Investors
The U.S. Commodity Futures Trading Commission has approved Ledgerx to offer physically-settled bitcoin spot and derivatives trading, previously available only to institutional investors, to retail investors of any size. Ledgerx explained that its new platform will share the same order book as the current institutional offering so plenty of liquidity is expected from day one.
New License From CFTC
The Commodity Futures Trading Commission (CFTC) announced Tuesday that it has approved the application of Ledgerx as a Designated Contract Market (DCM), effective Monday. The New York-based subsidiary of Ledger Holdings Inc. subsequently announced:
Five years and three licenses from the U.S. federal government later, we are officially licensed to offer our physically-settled BTC spot and derivatives trading to all investors.
“DCMs are most like traditional futures exchanges, which may allow access to their facilities by all types of traders, including retail customers,” the CFTC explained, adding that these platforms “may list for trading futures or option contracts based on any underlying commodity, index or instrument.”
Bringing Institutional Platform to Retail Investors
Following Monday’s approval, Ledgerx CEO Paul Chou confirmed that his platform is now approved to offer bitcoin spot and derivatives contracts, including futures and options, “to retail clients of any size.” The CEO previously revealed that his company “quietly applied” for this license last November.
Founded in 2014, Ledgerx is also registered with the CFTC as a Swap Execution Facility and a Derivatives Clearing Organization. Until Monday, it was only approved to offer services for institutional crypto trading, typically for those with $ 10 million in assets or higher, Chou described, emphasizing:
But bitcoin was not designed for just institutions. It’s designed for people, yet an open secret is that the vast majority of bitcoin trading happens over the counter (OTC) in markets of which most people are unaware or can’t access in any practical way.
He added that “transparency in the OTC markets is dim, to say the least.” As for Ledgerx’s future plans, the CEO revealed that additional crypto-specific derivatives will be launched this year.
New Platform for All Investors
All products for retail investors will be listed on Ledgerx Omni, the company’s new platform for both institutional and retail customers which was first unveiled on April 15. A $ 10,000 wire or 1 BTC is required to open an Omni account. Chou explained that any customers in the U.S. or Singapore can use the new platform with no net worth requirements, noting:
Everything is ‘physically’ settled, not cash settled which means you can both deposit and withdraw bitcoin to the account, in addition to your USD.
Further, no fees will be charged for any trades. “This is not a limited time promotion, it’s a forever kind of thing … No transaction fees, forever,” the CEO confirmed. Drawing from his own experience, the former Goldman Sachs trader explained the reason behind his platform’s no-fee policy. “In essence market makers had the power over stock exchanges so they negotiated getting additional money when a trade was done … The customer ‘taking’ not only paid the price but paid more on top of that, which distorts the actual effective price that they saw on the screen.”
For Omni, “market makers will pay all the exchange fees, as they’re the most capable ones to price them in their models in real time,” Chou said, reiterating that “the price you see on the screen is the total price you pay.” He further clarified:
Omni will share the same order book as our current institutional offering, so there will be plenty of liquidity from day one.
What do you think of Ledgerx bringing its institutional platform to all investors? Let us know in the comments section below.
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