LedgerX Trades Over $1 Million In Bitcoin Options And Swaps In First Week

Bitcoin derivatives clearinghouse LedgerX has announced that the first bitcoin derivatives trades have taken place on its platform - an important milestone for the nascent digital currency market that could open the door to more institutional involvement and, some say, the creation of the first bitcoin-focused ETF.

LedgerX confirmed rumors that it had already started clearing bitcoin derivatives trades in a statement provided to CoinDesk and a handful of other media outlets. According to figures provided by the company, LedgerX facilitated trading in 176 swaps and options contracts in its first week, an amount with a notional values of more than $1 million, according to CEO Paul Chou.

"This week, a new standard is set for transparency, oversight and counter-party assurance. Institutional investors and traders can now rely on a guaranteed clearing and settlement process when transacting bitcoin contracts," Chou said.

As CoinDesk points out, while the initial LedgerX trades appear to be exclusively bitcoin focused, the details of the license granted to the company by the CFTC in July allow for the creation of derivatives for other digital currencies as well. The company is reportedly working with options trading shops, asset managers, hedge funds, bitcoin miners, family offices, investment banks and virtually anybody else interested in helping it create a market for the new contracts.

"Our regulated, institutional-grade platform enables participants who were sitting on the sidelines, to enter the digital currency market."

LedgerX is licensed as both a swap execution facility (SEF) and a derivatives clearing organization (DCO).

The CFTC gave its blessing to LedgerX back in July when it approved the creation of the first designed bitcoin SEF, or swap execution facility. Previously, bitcoin derivatives were traded exclusively OTC on exchanges like BitMEX. But now, trading in bitcoin options will be centrally cleared in the same manner as option contracts on equities.

Congress mandated the creation of SEFs as part of its Dodd-Frank Wall Street reform bill in a bid to bring greater transparency to derivatives trading after synthetic CDOs and other shady “hedging instruments” tied to the mortgage securities helped wreck the economy in 2008,

Dodd Frank, helped by a raft of CFTC rules, helped create a complex trade-reporting ecosystem in US markets, which RiskFocus has illustrated in the infographic below:

Bitcoin options trading has come a long way since late 2015, when the CFTC officially went after bitcoin company Coinflip for operating a platform for trading bitcoin options without the proper authorization - confirming in the process that bitcoin would be treated as a commodity for regulatory purposes.

We imagine LedgerX won’t have too difficult of a time moving inventory, considering bitcoin’s astounding run of new record highs persists unabated. In a market starved for volatility, giving the "big boys" the ability to trade with massive leverage on what is already the most volatile asset class in existence is just what some funds need to make their year as they swing for the fences with 20x (or more in) margin.


VD cheka Sat, 10/21/2017 - 19:53 Permalink

yep. videogame coins, points and credits that were "mined" by Chinese forced slave gamer laborer farms-- remember that? this is no diff, except they are running the "reality" chimera extra hard now via btc et al. "coins". too obvious. to wit: http://www.npr.org/templates/story/story.php?storyId=10165824 https://www.theguardian.com/world/2011/may/25/china-prisoners-internet-…  not seeing a pattern? & those japanese that dont have sex, dont have jobs and are sitting around pumping btc? yep, itz "coins" like their "relationships". lotta yen in this crypt0-scam0la.

In reply to by cheka

overbet VD Sat, 10/21/2017 - 20:04 Permalink

All the different angles you come up with to attack btc I am starting to think youre a closet btc hoarder. If I think something is a scam I might say it once or twice, but you hit every thread with another outrageous theory. Please continue it is amusing especially as the price continues to rip. 

In reply to by VD

overbet VD Sat, 10/21/2017 - 20:13 Permalink

Whats the point? WMT, fang stocks, the whole market ripped too and made a lot of people rich. Even gold ripped before. I have a friend who put everything he had into physical gold ahead of y2k, about $2m invested at the time. He cleaned up. Things rip that arent scams.

In reply to by VD

strannick VD Sun, 10/22/2017 - 09:32 Permalink

"I have a good bit of one of those quantum resistant coins."But arent yiu assuming someone will want  one of your -or a million other newly created- coins that arent really coins?You wont even be able to pet and drool over "the precious" unless maybe  its glimmering  inside a memory card?

In reply to by VD

tmosley VD Sat, 10/21/2017 - 22:19 Permalink

Yeah, that's what I said you retard.It can be added to the BTC protocol in about five minutes. If it isn't, then I will be rich, Rich, RICH, RICH because I have a good bit of one of those quantum resistant coins.While you will sit there and whine like you always do.

In reply to by VD

fiatliberty1776 VD Sat, 10/21/2017 - 22:27 Permalink

Usually the one making (false) claims is the one that needs to provide evidence otherwise it is true that scientists have finally figured out a way to make gold out of lead. You can look that up on your search engine of choice; it will yield resultsIs your search engine broken? Please send me a link, I am always willing to learn new things unlike goldbugs

In reply to by VD

fiatliberty1776 Xena fobe Sun, 10/22/2017 - 00:38 Permalink

LOL! Gold ownership is concentrated in the hands of Central Bankers. During the next financial crises they will dump it on the naive goldbugs to buy real assets and then laugh at the bagholders caught with the shiny rocks which have little real utility while they take ownership of all the factories, farmland, homes and whatever assets they wantSupport your local Central Banker and buy GOLD!!edit: Would any of the downvoters care to tell me why I am wrong?

In reply to by Xena fobe

fiatliberty1776 shizzledizzle Sun, 10/22/2017 - 00:16 Permalink

A great feature of digital currencies is that you can prove ownership of coins anywhere and anytime so you have to prove ownership of coins before you can short them. Would be hard/impossible with physical objects like gold so there will need to be derivitives and paper contracts that are worthless and can be used to manipulate prices where you don't need to have that kind of trading system with bitcoin

In reply to by shizzledizzle