By Josiah Wilmoth
LedgerX has officially become the first U.S. exchange to process regulated bitcoin derivatives trades. Despite taking steps to avoid fanfare and media attention, the trading platform ultimately facilitated more than $1 million in transactions from institutional clients during its first week of trading.
LedgerX Brings Bitcoin Derivatives to U.S. Markets
Although many institutional investors are considering entering the cryptocurrency markets, they have been inhibited by low liquidity and a lack of trading platforms that are compliant with the stringent guidelines that must be met to offer derivatives to institutional clients. Although liquidity remains lower than most investors would like, it has steadily improved throughout the year, but the dearth of regulated bitcoin options has kept many institutional investors on the sidelines.
That changed this week when regulated cryptocurrency exchange and clearinghouse LedgerX began its soft launch after spending more than three years developing its platform and obtaining regulatory approval to support institutional trading. The New York company has licenses to operate as a swap execution facility (SEF) and derivatives clearing organization (DCO), and it currently offers both put and call options and day-ahead swaps through its web trading interface.
‘Soft Launch’ Attracts $1 Million in Trades
LedgerX made no official announcement when it launched its platform and expected to processes only a handful of trades, but CoinDesk reports that the platform saw 176 swaps and options contracts worth more than $1 million traded during its opening week.
“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,” CoinDesk cites LedgerX CEO Paul Chou as saying.“Our regulated, institutional-grade platform enables participants who were sitting on the sidelines, to enter the digital currency market.”
Indeed, analysts expect that institutional platforms such as LedgerX will usher in a wave of liquidity to the cryptocurrency markets, making it easier for firms to open and close large positions in bitcoin, ethereum, and other crypto assets.
At present, LedgerX only supports bitcoin trading. However, its CFTC license grants it the ability to add additional cryptocurrencies to its platform in the future.
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