Cryptocurrency Derivatives Series: Heads-up on CFTC’s Stances of Latest BTC Futures

Year-2019 has been conducive for the Bitcoin prices so far, it has been spiking constantly higher from the last couple of weeks, rose from the lows of $3,122 levels to the recent highs of $13,880 levels which is the 2019 highs (i.e. almost more than 344% in this year so far). We are now on the verge of hitting multi-month highs as it breaks-out $11k and surpassed 11.5k mark.

We have an array of derivatives markets for traditional asset classes, such as, from a range of stocks to mortgages, be it ETFs, index funds, index options or hedge funds, etc. Many Wall Street players are now, lined up for such contracts are being designed and developed for bitcoin and other crypto peers and desperately eyeing to obtain regulatory approvals.

The US Commodity Futures Trading Commission (CFTC) appears to have denied issuing approvals soon after the unveiling of its physically-settled Bitcoin Futures contracts. 

As per the recent press release, the U.S. Commodity Futures Trading Commission (Commission) announced today that by a unanimous vote of the Commission, it has issued an order granting LedgerX, LLC (LedgerX) registration as a derivative clearing organization under the Commodity Exchange Act (CEA). 

LedgerX says a clearinghouse and a bitcoin derivatives exchange based in the US would be launched Bitcoin Futures contracts which would be meant for retail clients resembling Bakkt’s physical settlement mechanism.

LedgerX has also confirmed the news and they seem to focus on their targeted area which is retail clients, whereas 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) and they are likely to lure institutional inflow. The new cryptocurrency start-up, ‘Bakkt’ established by the Intercontinental Exchange (ICE), was all set to launch bitcoin futures contracts with physically delivery facilities. 

Under the order, LedgerX will be authorized to provide clearing services for fully-collateralized digital currency swaps. LedgerX, which was also granted an order of registration as a Swap Execution Facility on July 6, 2017, initially plans to clear bitcoin options. CFTC has also stated that “LedgerX has not yet been approved by the commission.”