Bitcoin Derivative Platform LedgerX Nudges Closer to CTFC Approval

Merging the existing financial ecosystem with the world of Bitcoin and virtual currencies is not an easy task.  While there is a clear legal framework for the financial sector, virtual currencies are facing an uphill battle when it comes to regulation and legislation.  However, there is a small light at the end of the tunnel, as Bitcoin derivatives exchange LedgerX received temporary approval from the Commodity Futures Trading Commission.

LedgerX – Bitcoin Derivative Exchange and TradingLedgerX

The LedgerX platform has been in the pipeline for quite some time now, despite being backed by major names such as Google Ventures and Lightspeed Venture Partners.  Their business model holds a lot of promise and has attracted quite a lot of attention, as derivative exchange and derivative services with Bitcoin are something many people have been waiting on.

At the time of publication, LedgerX has received a temporary approval from the US Commodity Futures Trading Commission.  This process to gain approval has taken up a fair bit of time already, as LedgerX submitted their official application over a year ago.  While this temporary approval is a light at the end of the tunnel, there is no guarantee of LedgerX being given the green light.

Assuming LedgerX’s business model would be approved by the CFTC, the platform would become the first federally-regulated Bitcoin options exchange and clearing house.  Furthermore, LedgerX will list and clear fully-collateralized and physically-settled Bitcoin options for the institutional market.

What makes LedgerX so interesting is their company structure.  Considering the management team consists of former Goldman Sachs, CTFC and MIT alumni, there is a vast expertise and experience on hand to make this platform a major success.  Combining this with the aforementioned early investors, it becomes crystal clear why LedgerX has attracted so much attention in recent months.CTFC

The Road to Green Lighting LedgerX

There is still a long road ahead before LedgerX will get the “official” green light from the Commodity Futures Trading Commission.  The next step is assessing the company’s compliance in terms of the Commodities Exchange Act.  Additionally, there are other regulatory requirements pertaining to the Swap Exchanges Facilities, anti-money laundering and KYC.

More information may be requested from LedgerX to thoroughly investigate the company’s efforts in terms of being compliant and having all their ducks in a row.  The most positive outcome would be for LedgerX to receive its full license, but it will take a few more months until the final verdict will be made public.

“This is a first step and is positive progress, but it is just one milestone toward our ultimate goal.  Our mission is still to obtain a derivatives clearing organization license (DCO) to operate a federally regulated bitcoin derivatives exchange and clearing house.  At this time, we do not intend to launch with only an SEF license.”  – LedgerX CEO Paul Chou told DigitalMoneyTimes.

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Images courtesy of Shutterstock, LedgerX, CFTC