LedgerX becomes first to launch physical bitcoin futures on US market

BTC derivatives provider Ledger X has become the first company to launch physically-settled bitcoin futures contracts in the United States.

LedgerX is offering the new product to both retail and institutional investors in the U.S. and Singapore. Retail clients can trade via its new Omni platform, and a $10,000 wire or 1 BTC is required to open an account. Meanwhile, institutional customers can trade futures as with any other products of LedgerX.

Investors are required to follow the know-your-customer (KYC) and anti-money laundering (AML) protocols to trade the contracts.

The latest announcement makes LedgerX the first to offer physical futures, which allow clients to receive the actual bitcoin instead of its cash equivalent when the contracts expire.

“Not only are they delivered physically in the sense that our customers can get bitcoin after the futures expire, but also they can deposit bitcoin to trade in the first place,” LedgerX CEO Paul Chou told CoinDesk.

He further noted that this is the first time a regulated company accepts bitcoin as collateral for a contract, which eliminates the waiting time for bank transfers and other bank limitations. Such an arrangement also makes bitcoin trading possible 24 hours a day, 7 days a week, and 365 days a year.

Currently, there are a number of firms seeking to offer physically-settled bitcoin futures in the U.S. Intercontinental Exchange-backed Bakkt and TD Ameritrade-supported ErisX have both revealed their intentions to enter the market.

Bakkt is reportedly slated to launch its services in the third quarter of this year, although it still needs the approval of the New York Department of Financial Services to operate its warehousing service.

The company has started testing the delivery of both bitcoin daily and monthly futures. As per its Commodities Futures Trading Commission (CFTC) filing, the contracts will be physically settled, with prices highly dependent on internal pricing discovery.

Meanwhile, ErisX has recently obtained a derivatives clearing organization (DCO) license from the CFTC. The crypto exchange wants to make digital asset future contracts available for trade on its derivatives market.