Today, LedgerX is announcing the industry first, formal regulatory approval
to offer bitcoin spot and physically-settled derivatives contracts (including
options, futures, and more), to retail clients of any size. These products will trade on a new platform enabled by our Designated Contract Market (“DCM”) license; Say hi to LedgerX Omni.
We were founded in 2014, and initially obtained approval to act as a Swap Execution Facility (SEF) for institutional crypto trading (typically $10 Million USD in assets or up) in late 2017.
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. And transparency in the OTC markets is dim, to say the least. These structural problems are strikingly similar to causes of the financial crisis of 2008, when bi-lateral (OTC) credit default swap trades between banks were opaque and secret, until the problems become too large to ignore and at a hair’s width of being unfixable. I worked as a trader at Goldman Sachs back then, so I viscerally understand those pain points.
With our new license granted today, both retail and institutional customers can interact in the same transparent marketplace, LedgerX Omni, the first and only regulated US institution to offer these capabilities to the retail audience. We can now provide a robust market for a much broader audience, providing access to individuals who want to get exposure to the fast-growing crypto investment sector via derivatives products that they could not access in the past. In fact, we are the only company to have received both a Swap Execution Facility (“SEF”) and a Derivatives Clearing Organization (“DCO”) registration to enable regulated trading of bitcoin derivatives. By operating both the exchange and clearing house, we can uniquely offer clients a vertically integrated trading and custody solution. If you live in the US or Singapore, have a driver’s license or other form of government ID, you can literally sign up within 90 seconds. We accept both USD and BTC deposits, or some combination of the two, whatever floats your boat.
We have the license, but we also have a long waitlist. On-boarding will be performed slowly and require your patience, to allow us to thoroughly test and monitor the technology systems throughout the process, and to make sure that the customer experience is outstanding. The good news is that from day one, new traders will have access to market makers on the platform who have been providing competitive prices 24/7/365 over the last 2 years to the institutional market.
This was not a fast or easy process by any means. It took us more than 5 years to get to this point. That said, do not heed those who claim a slowly-moving government as an excuse to cut corners, or to do things that violate securities laws. (Also ignore people using marathon analogies to hide execution mistakes; there is such a thing as too slow in the crypto world). The authorities have been very thoughtful and careful in this regard, way beyond any other international government regulatory agency that we see. The United States Commodities Futures Trading Commission (“CFTC”), our regulator, has taken extraordinary leadership in this uncharted world of cryptocurrencies. They have recognized that if crypto is a commodity, then we had better make sure that we get it right, and make sure customers are safe.
Our regulators, at both the staffer and commissioner level, have demonstrated this approach in spades. They deserve enormous recognition for their thought and regulatory leadership. This post is not primarily to announce LedgerX Omni — rather, it’s to them.
This new retail license is the first step in one of many we have planned for this year including the launch of additional crypto-specific derivatives and more. Stay tuned.
For questions, contact: [email protected]