…beating the long-awaited Bakkt to the punch. What effect will this have on the market?
LedgerX has managed to come in ahead of Bakkt, launching its physically-settled bitcoin futures product yesterday. The company received the required licence from the relevant US regulator, the Commodity Futures Trading Commission (CFTC), back in June. Bitcoin futures will be available for anyone on LedgerX’s Omni trading platform.
Physical vs cash-settled
Physically-settled futures are the next big thing for the crypto space. Existing futures, such as the ones provided by CME (which launched in December 2017), are cash settled. This means they’re really only paper contracts. No bitcoins are bought or sold, which means there’s minimal impact on the underlying market.
With physically-settled futures, the positions are settled on the real bitcoin market. The trader receives BTC rather than USD – which means any demand is passed through to the same market that regular crypto traders are using.
The launch makes LedgerX the only US regulated spot and options exchange for Bitcoin. The site states, ‘We offer a range of strikes from $2,000 to $50,000 for terms that expire out to 2020.’
That’s pretty cool, because you can deposit BTC and take a punt on where the market is likely to be a year from now. Unless something goes hideously wrong, there are going to be a lot of crypto-savvy traders who are very happy about that.
In LedgerX’s case, you can actually pay for your positions with bitcoin, too – therefore totally circumventing the banking system. Ordinary retail traders can sign up, deposit BTC, take a position and be paid out in BTC at the end.
This makes LedgerX a little like BitMex, only without the shady liquidation hunting and insane 100x leverage. Plus you can use USD to fund your account. Plus Nouriel Roubini isn’t spearheading a campaign to have LedgerX’s CEO hauled off in handcuffs.
All eyes are still on Bakkt as a conduit for major institutional money, but LedgerX aims to serve both the retail and institutional market. Bakkt is expected to launch within the next two months, pending final regulatory approval.
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