U.S. derivatives regulators are considering a registration application from a firm seeking to clear derivatives on the Bitcoin virtual currency.
The U.S. Commodity Futures Trading Commission (CFTC) is seeking public comment on an applications from a company known as LedgerX, LLC, which is seeking registration as a derivatives clearing organization and as a swap execution facility. The CFTC says that the firm plans to list and clear fully collateralized, physically settled options on Bitcoin.
Earlier this year, LedgerX announced that it had applied for registration in order to list physically settled digital currency option contracts. If approved, the firm would become the first regulated derivatives exchange and clearing house where institutions could obtain Bitcoin assets and hedge digital currency fluctuations, it said.
According to the firm’s filing, it is back by venture firm, Lightspeed Venture Partners IX LP, which has a 20% stake in the company; Google Ventures 2014 LP also has a 2% stake.
“Digital currency derivatives present a huge opportunity, but to gain mainstream adoption, a regulated market will need to be developed,” said James Newsome, a member of the firm’s board, when the application was first announced. “By providing liquidity and a secure venue for investors to manage short and long-term risk, LedgerX will facilitate the evolution and adoption of these products.”
The CFTC is seeking comments on the applications by Jan. 30, 2015.