It's official, regulated derivatives markets are here!
LedgerX's cryptocurrency derivatives market is up and running and in its first week of trading, LedgerX traded $1 million worth of Bitcoin derivatives.
Which marks the first time regulated cryptocurrency derivative trades have taken place on a US based exchange.
LedgerX had gained approval from regulators a few months back but the exact timing of when it would start trading cryptocurrency derivatives wasn't entirely known.
However, it appears they are up and trading already!
According to LedgerX in a statement out yesterday, they had already just completed their first week of trading.
The specifics:
According to figures provided by LedgerX in the release, they saw 176 swaps and options contracts traded in the first week.
The dollar value of the trades totaled more than $1 million USD.
The CEO of LedgerX, Paul Chou, had this to say:
"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."
It feels good to be the first eh?!
Some more specifics:
The trades in the first week appear to have been done exclusively in Bitcoin, but the company has the ability to include other cryptocurrencies should they so choose.
In fact, in their original release they stated that they planned on including a handful of the most popular cryptocurrencies in their derivatives market and then would branch out from there.
More than just "in their plans" though, the license they already received gives them the option to add other cryptocurrency assets, with Ethereum derivatives expected to be next in line.
What is LedgerX?
LedgerX is a licensed swap execution facility as well as a licensed derivatives clearing organization that was founded in 2013.
It is based out of New York and first received licensing as a swap execution facility back in 2015.
The company is made up of former Goldman Sachs employees, MIT graduates, and former CFTC alumni.
It's key people include:
- Paul Chou, Chief Executive Officer and Co-Founder
- Juthica Chou, President and Chief Risk Officer, Co-Founder
- Zach Dexter, Chief Technology Officer, Co-Founder
Looking to expand?
LedgerX is also exploring working with options trading shops, assets managers, hedge funds, bitcoin miners, and major investment banks as a way to grow its user base.
For now the derivatives are being offered exclusively to institutional clients as a way for those clients to gain exposure to the cryptocurrency industry without having to take the risk of purchasing the assets outright.
Choe echoed that sentiment:
"Our regulated, institutional-grade platform enables participants who were sitting on the sidelines, to enter the digital currency market"
This may not be as good as having more people buy the assets directly, but anytime more money is coming into the ecosystem the better.
Some of that money will eventually find it's way into the assets themselves, especially since the exchanges may have to buy them to back up some of these derivative contracts.
Stay informed my friends.
Sources:
http://www.marketswiki.com/wiki/LedgerX
https://www.coindesk.com/ledgerx-trades-1-million-bitcoin-derivatives-first-week/
Image Sources:
http://news.dinbits.com/2017/07/cftc-grants-ledgerx-digital-currency.html
https://www.coindesk.com/ledgerx-trades-1-million-bitcoin-derivatives-first-week/
Follow me: @jrcornel
“Ah so”, I said to myself as I got into your article. Why did I do that?
If you look at the charts for the last several days of trading you will see something rather unusual -- Bitcoin was taking off almost like a rocket, and some old stalwarts which normally tag along for the ride did not do so on this occasion. And I wondered to myself whether this was a signal that the long-awaited “Wall Street money” was now starting to flow into Bitcoin (I know, some hedge funds are there already).
I can see American institutional money pin-pointing Bitcoin; because of the depth and international scope of its network. It appears, for example, that in some countries a growing number of ‘ordinary people’ are resorting to Bitcoin as being a better store of value than fiat money. On top of that, I can see more and more institutions thinking they don't "The King's Dollars" as much as they used to need it just do trading; because Bitcoin will do just fine for that purpose. By making options available to international traders of goods and services, they will be able to hedge against price change in Bitcoin while they are holding it for a trade transaction.
Even if I’m wrong, and what happened to Bitcoin this week is not a signal of the long-awaited entry of Wall Street Money, I can see some traders who sit on large pools of money (along with their algo bots) thinking that the commencement of derivatives trading by Ledger X means that it is time to make their move. And, for sure, somewhere in the ‘derivatives chain’ the underlying asset will have to be available for delivery if needed, which could mean progressively tightening supply of Bitcoin for sale!
So, thanks a lot for this story and for your professional documentation around it.
Great comment. My thoughts as well, especially about that part about hedging. If institutions just start adding crypto as a 1-5% allocation, watch what happens to the prices of these things...
Thank you, and this page is now rich value between your post and several of the other comments. Thanks to all taking the time to lay out ideas here, as this could be a really key turning point for cryptos in the USA.
The next big ones will include the arrival of an ETF (the 'smart money' seems to think this is where BTC will get up to 10,000) and the arrival of official regulations from SEC, IRS and perhaps a House/Senate bill.
The official regulations will tell you which cryptos the big banks will try to kill off, IMO. Keep in mind that at this time your crypto riches 'assume' that we will always have bridges to move cryptos to and from fiat, and those guys control the bridges.
I'm reminded of that scene from the movie Casino where Nicky first arrives in Las Vegas and he and Rothstein are out for a drive and says to Ace:
"Look at this place, it's made of money. You know what the best part is? Nobody's gonna know what we're doing"
All the stock market scam artists are migrating to the crypto world to pull all their old tricks.
I think this is a good sign for the US based crypto community. As more people get involved the higher the chance that USA is becoming a leader in this markets!!!
on one side it is a good sign, but on second thought those big hedge funds will overtake the market and they will dictate the flow
Aww yes its time to open a crypto wallstreet now!
Manipulation (more?) will come, but so will added liquidity.
yes
A digital wallstreet is the next logical step for the market sooner or later someone will try to open one and it might have manipulation but as bitcoin is transparent we can keep it from just benefiting the wealthy and make sure no one is trying to game the system and lets not forget that wallstreet is also responsible for bring a lot of investment in the market using derivatives and other instruments and that can also easily be done on a crypto-wallstreet.
lol
That sounds like a terrible idea, but I guess it couldn't be worse than the current wall street
I think it's not a great idea .. as eventually greedy bankers will start manipulating prices ect if it's already not happening .
thanks
Crypto's are on a roll!
Crypo industry is getting larger day by day. It will be trillion dollar industry in coming decades.
it is
Nice! Thanks for the information.
On other hand getting hedge funds to invest in Bitcoin will mean that they will have a high card when talking about exchanges, and a lot of traders might loose a lot. Thoose funds will trade with milions of dollars every day and they will only expand their operations and eventually overtaking market
With LedgerX going full speed we might see a BTC going as far as 15-20k USD in less than 6-10 months from now. Some will say that it is too huge but lets not forget what was the price of Bitcoin at the begining of this year and what price is right now.
I do belive that with bigger addoption that we are seeing now higher prices of Bitcoin will be faster.
good point