CFTC Approves LedgerX’s DCM Application
The United States Commodity Futures Trading Commission (CFTC) has marked a significant milestone by approving LedgerX LLC’s request to operate as a designated contract market (DCM), effective June 24, 2019. This announcement, made on June 25, highlights the growing acceptance of cryptocurrency derivatives in regulated markets.
What is a Designated Contract Market?
A DCM is a marketplace that enables the trading of futures contracts and is recognized under the Commodity Exchange Act (CEA). By obtaining this designation, LedgerX can expand its offerings beyond merely clearing swaps, opening the door to more complex products. This means they can now list futures contracts, which has been a hot topic in the crypto community.
Compliance is Key
With great power comes great responsibility. LedgerX will now be required to adhere to all relevant regulations under the CEA and the CFTC’s guidelines. Compliance will ensure that they operate within the framework set out to protect investors and maintain market integrity.
Expanding the Customer Base
LedgerX aims to broaden its client base by reaching out to retail customers, moving beyond its traditional institutional status. Co-founder Juthica Chou noted, “We’ve long had the goal to expand the range of customers we can serve beyond our institutional base — it’s the natural next step for us.” This strategy is designed to provide a seamless experience for retail investors, leveraging their established institutional liquidity.
The Broader Market Context
This approval comes amid a wave of moves in the cryptocurrency space, particularly with the announcement from institutional platform Bakkt, which plans to test its first product—physically-delivered bitcoin futures—on July 22. Adam White, Bakkt’s COO, emphasizes the need for better infrastructure in crypto: “This launch will usher in a new standard for accessing crypto markets.” The juxtaposition of these developments signals a growing interest in making cryptocurrency trading more accessible and mainstream.
