Monday, September 14, 2015

LedgerX Gains Temporary Approval to Operate Bitcoin Options Exchange

By John Filar Atwood

The Commodity Futures Trading Commission (CFTC) has approved the application of LedgerX LLC for temporary registration as a swap execution facility. LedgerX, a wholly-owned subsidiary of NYBX Inc., claims to be the first federally-regulated bitcoin options exchange and clearinghouse to list and clear fully-collateralized, physically-settled bitcoin options for the institutional market.

Next step. The CFTC indicated that it has reviewed LedgerX’s application for completeness only, which is why the grant of registration is currently temporary. The CFTC’s next step is to undertake a substantive review of the application for full registration, the Commission said in a press release. The grant of temporary registration does not affect the CFTC’s right to grant or deny full registration.

In the letter granting temporary registration, the CFTC advised that its approval is subject to LedgerX’s compliance with all applicable provisions of the Commodity Exchange Act (CEA) and Commission regulations. In addition, the approval does not mean that the CFTC has determined that LedgerX is fully compliant with the CEA and Commission regulations.

Not listing approval. The CFTC emphasized that the grant of temporary registration does not provide LedgerX with approval to list any product for trading. Prior to listing a product for trading, the CFTC said, LedgerX must comply with the submission requirements for certification under Section 40.2 or seek approval under Section 40.3 of the Commission’s regulations.

LedgerX is an institutional trading and clearing platform that will trade and clear options on bitcoin. It applied for registration with the CFTC as a swap execution facility and derivatives clearing organization in September 2014. The company’s board members include Jim Newsome, former chairman of the CFTC. Google Ventures and Lightspeed Venture Partners were early investors in LedgerX.

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