The first United States bitcoin options exchange just received Swap Execution Facilities (SEF) registration from the Commodities Futures Trading Commission (CFTC).
The CFTC announced the SEF registration of institutional trading and clearing platform LedgerX, a Delaware registered limited liability company with its primary place of business in New York.
The U.S. Commodity Futures Trading Commission (CFTC) announced today that it has issued an Order of Registration to LedgerX LLC (LedgerX), granting it registration status with the CFTC as a Swap Execution Facility (SEF)
According to the LedgerX website, the company is set to become the first federally regulated bitcoin options exchange and clearing house to list and clear fully collateralized, physically settled bitcoin options for the institutional market.
In May, the company announced the closing of $11.4 million in Series B financing. The announcement came with the following statement from LedgerX CEO Paul Chou:
Led by Miami International Holdings Inc. and Huiyin Blockchain Venture Investments, this funding supports LedgerX’s plan to operate a regulated exchange and clearing house for bitcoin and other digital currencies.
In the short term, these investments will further our application to become a regulated exchange and clearing house for bitcoin options. In the long term, these strategic investors will help us enter additional marketplaces and territories.
Raise eyebrows from liberals in legislature
Democrats have repeatedly pointed out that the administration is too close to Wall Street and particularly Goldman Sachs, while Elizabeth Warren, the Democratic stalwart Senator from Massachusetts and the chief Wall Street critic, has decried the so-called “revolving door waltz” between regulatory bodies and the companies they regulate.
Speaking of the company’s application for registration with the CFTC as a SEF and derivatives clearing organization (DCO) the Company’s website states the following:
LedgerX management team comprises Goldman Sachs, MIT and CFTC alumni, who bring financial expertise, technical talent and regulatory experience to the firm. Ananda Radhakrishnan, former Director of the CFTC’s Division of Clearing and Risk and Partner at Norton Rose Fulbright, and Carl Mahler, Partner at Gelber Group, currently sit on the LedgerX LLC Board of Directors.” “Mark Wetjen, Managing Director at Depository Trust & Clearing Corp (DTCC) and former Commissioner of the CFTC, and Robert Castrignano, Principal in the Equities Division at Sandler O’Neill + Partners, L.P., currently sit on the board of directors of Ledger Holdings Inc., the parent company of LedgerX.
On December 16, 2016, Ledger Holdings and Miami International Holdings, Inc. (MIH), the parent holding company of the MIAX Options Exchange, jointly announced that MIH had completed an investment in Ledger Holdings. Early investors in Ledger Holdings include Google Ventures and Lightspeed Venture Partners.
LedgerX LLC. is a wholly owned subsidiary of Ledger Holdings (formerly known as NYBX), which also holds on to LedgerPrime LLC., whose mandate, according to the company website, is to make markets in cryptocurrencies and their derivatives.
The website also mentions that “On December 16, 2016, Ledger Holdings and Miami International Holdings, Inc. (MIH), the parent holding company of the MIAX Options Exchange, jointly announced that MIH had completed an investment in Ledger Holdings. Early investors in Ledger Holdings include Google Ventures and Lightspeed Venture Partners.”
 SEFs are platforms that operate under the CFTC’s regulatory oversight for the trading of swaps. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Act) authorized the creation of SEFs.