First Regulated Bitcoin Exchange LedgerX’s Application Gets Public Consultation by CFTC

The CFTC has issued a note requesting public comments on the dynamics of the first Bitcoin derivatives exchange that specialises
Photo: Adil Siddiqui

cftc_logoThe reality of virtual currencies transaction in a regulated environment came a step closer as the US financial regulator, the CFTC, issued a public consultation on the feasibility of the first derivatives venue for Bitcoin options. LedgerX, a US-based financial technology startup firm’s application will be at the mercy of financial professionals who have until the 30th of January to send their input to the regulator. The move comes as Bitcoins continue to gain traction as alternative payment solutions.

The CFTC’s notification comes two months after the firm filed its application as an SEF and derivatives clearing organization. The CFTC states that it “is asking for public comment on related applications submitted by LedgerX, LLC (LedgerX), for registration as a derivatives clearing organization and registration as a swap execution facility. LedgerX plans to list and clear fully collateralized, physically settled options on Bitcoin. Comments should be submitted on or before January 30, 2015. “

LedgerX will join regulated entity, TeraExchange, in the circle of authorized Bitcoin trading venues. In October this year, the first Bitcoin derivatives swaps transaction took place, the same month as LedgerX’s application was submitted. TeraExchange gained CFTC approval to operate and provide access to Bitcoins in September.

LedgerX was not available for comment.

LedgerX was formed in December 2013 by a number of professionals from the banking, finance and technological sectors. The firm’s regulatory application has been managed by Kari Larsen, a legal professional who was the former Counsel at the CFTC and Green Exchange.

Professionals who are interested in sharing their views on the matter can do so through the CFTC’s online comment processing system. The CFTC states that all comments received will be posted on the CFTC website.

US traders welcomed the first binary options Bitcoin transaction that was made available on Nadex, thus allowing retail investors to trade on a regulated exchange.

The CFTC has been one of the world’s most developed regulators to show a keen interest in the virtual currencies sector. In October, the watchdog held a meeting with its Global Markets Advisory Committees where experts addressed the Bitcoin sector. Digital currencies were discussed on a panel discussion by members of exchanges, regulators and providers, including David Van Wagner, Chief Counsel, Division of Market Oversight, U.S. Commodity Futures Trading Commission; Thomas Leahy, Associate Director, Division of Market Oversight, U.S. Commodity Futures Trading Commission; Jerry Brito, Executive Director, Coin Center; Houman Shadab, Professor of Law, New York Law School; Tim Byun, Chief Compliance Officer, BitPay and Leonard Nuara, President and Co-Founder, TeraExchange.

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