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Digital currency investors and miners will be able to hedge the volatile assets under U.S. regulatory oversight for the first time in just a couple of months.
The U.S. Commodity Futures Trading Commission granted LedgerX LLC, a cryptocurrency trading platform operator, registration as a clearing house for derivatives contracts settling in digital currencies, according to a statement by the regulators Monday. With the approval, LedgerX is set to become the first federally regulated digital currency options exchange and clearinghouse in the U.S. as interest and volatility in the method of exchange surges.
“It’s an important milestone for the digital currency market broadly,” said Paul Chou, a former Goldman Sachs Group Inc. trader, who is LedgerX’s chief executive. “This will pave the way for others globally to look at the space and the appropriate way to regulate a new market like this.”
The New York-based company plans to offer one to six month bitcoin-to-dollars options contracts in late September to early October, Chou said in a telephone interview. Contracts for other digital currencies including for Ethereum’s ether are expected to follow, as well as longer-term protection.
The CFTC had granted LedgerX authorization to trade digital currencies earlier this month. The company, which is backed by Alphabet Inc.’s venture-capital arm, aims to provide institutional investors the ability to hedge against price swings in digital currencies in the same way they protect against volatility in other assets.
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Other platforms that offer options trading are Bitcoin Mercantile Exchange, owned by Seychelles-incorporated HDR Global Trading Ltd., and Deribit of Amsterdam. In 2015, the CFTC ordered bitcoin options trading platform Derivabit, ...