Breaking: LedgerX now Enabling Institutional Cryptocurrency Investments in U.S.

attalis (52)in #ledgerx • 7 years ago

On Monday the U.S. Commodity Futures Trading Commission approved the cryptocurrency trading platform ‘LedgerX’ for clearing derivatives. LedgerX is a Swap Execution Facility, managed amongst others by Goldman Sachs, Massachusetts Institute of Technology and CFTC alumni.

This is a pivotal moment in the history of cryptocurrency trading as this will now allow institutional investors to enter the market. On cnbc.com Paul Chou, CEO of LedgerX, states: “A U.S. federally-regulated venue for derivative contracts settling in digital currencies opens the market to a much larger customer base. We are seeing strong demand from institutions that previously could not participate in the bitcoin market due to compliance restrictions against unregulated venues.”
The reason why U.S. investors are very interested in this market is not just because it’s growth rate, but maybe even more importantly becuase it is not directly affected by the stock market’s performance.

Also on the website of LedgerX it is clear this may be a massive milestone in the crypto currency world: “We hope that our offering opens the market to a new set of participants that have so far sat on the side lines, adding many billions of dollars of market capitalization to all cryptocurrencies.” Chou also stated that Bitcoin and Etherium options will be traded this fall already.

In addition to derivatives like options we can expect more from LedgerX as they are a “Swap Execution Facility for a reason”. They are introducing Day ahead Swaps as well which is basically a futures contract, currently highly traded in the equity markets. This should increase the volume of trading based on cryptos even more.

This is also a positive step on the road to accept cryptocurrencies as collateral as part of wider acceptance by market participants. In a separate article on CNBC, Francisco Blanch, strategist for BoA Merrill lynch states that the most important “hurdle for bitcoin is whether major financial institutions will accept the digital currency as collateral”. Once this is achieved, prices will soar further, but we will explore that further in another article.

Is there more positive news? Yes there is. LedgerX doesn’t stop at getting just the domestic institutional investors on board as Paul Chou explains in his blog. “With the recent CFTC agreement with international regulators for an ‘equivalence’ arrangement, or roughly, a fast track way for existing federally regulated institutions to acquire equivalent licenses in other countries — well, this path is certainly on our roadmap.”

All things considered these are very positive longer term developments for the cryptocurrency domain.

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