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first_img A CFTC order authorizes the firm to provide clearing services for fully collateralized digital currency swaps. Earlier this month, the company was also approved for registration as a swap execution facility (SEF), which allows it to clear Bitcoin options. New York-based LedgerX says traders will be able to obtain and hedge Bitcoin and other digital currencies using exchange-traded and centrally cleared options contracts. Initially, it plans to list one- to six-month options contracts for Bitcoin, with contracts for other digital currencies, such as Ethereum, to come in the future. Registered broker-dealers, banks, futures commission merchants, qualified commodity pool entities and qualified HNW investors will be eligible to participate in its market. “A U.S. federally regulated venue for derivative contracts settling in digital currencies opens the market to a much larger customer base,” said Paul Chou, CEO of LedgerX, in a statement. “We are seeing strong demand from institutions that previously could not participate in the bitcoin market due to compliance restrictions against unregulated venues. In particular, there is a desire for fund managers to hold financial instruments that are not correlated with the broader equity market, and digital currencies meet that need.” The CFTC noted that the decision to grant authorization to provide clearing services for digital currency swaps does not represent an official endorsement of the use of digital currency generally, or Bitcoin specifically. The terms and conditions of the order require, among other things, that LedgerX comply with U.S. derivatives laws, and that it adhere to promises that it has made to the CFTC regarding compliance with CFTC rules and its underlying principles. Share this article and your comments with peers on social media James Langton Related news Bitcoin should face tough capital rules, Basel Committee says New York attorney general secures receiver for crypto firmcenter_img How should banks allocate capital for crypto? Keywords Derivatives,  CryptoassetsCompanies Commodity Futures Trading Commission U.S. derivatives regulators have approved a digital currency firm, LedgerX LLC, to function as a registered derivatives clearing organization (DCO). This move clears the way for financial firms and high-net worth (HNW) investors to trade in digital currency options. The U.S. Commodity Futures Trading Commission (CFTC) voted unanimously to grant LedgerX registration as a DCO in the U.S. Facebook LinkedIn Twitterlast_img read more