United States crypto derivatives trading platform LedgerX has its sights set on the launch of a physically-settled Bitcoin (BTC) futures contract. This news comes via a report from The Block published on April 15th.
LedgerX, which is fully regulated and overseen by the United States Commodities Futures Commission (CFTC), has reportedly applied for a designated contract market license last November, which would enable it to launch this new futures product.
Although there are already Bitcoin futures contracts available for trading — notably from the CME Group — they are settled in fiat currency. These futures would be settled in actual Bitcoin, meaning traders would be paid out in BTC once the contracts expire. This may seem like a small difference, but it has huge ramifications for the space. While it has long been speculated that fiat-settled futures contracts allows large institutions and investors with significant means to manipulate the price of Bitcoin without actually buying or selling any of the token, these sort of physically-settled futures would not allow that to happen, since traders would inevitably end up owning Bitcoin once the contract expired.
According to LedgerX co-founder Juthica Chou, the license application centers on making the product available to retail investors:
“I think at this current time we don’t see the demand growing among really large institutions and banks. We are still a $85 billion market cap for bitcoin — really just the size of a large stock. Right now we see the opportunity towards the other end of the spectrum.”
To this end, LedgerX also reportedly has plans to launch a retail-centric version of its derivatives platform, called Omni, which would list Bitcoin futures, as well as options and swaps, and provide clearing and custodian services.
With this strategy, LedgerX is effectively going against the grain of the rest of the space, which is generally waiting for banks and other large companies and institutions to enter the crypto space, as has long been rumored.