Tuesday 26th of September 2017

Will Options Trading Bring Institutional Investors to Bitcoin? PDF Print E-mail

With LedgerX becoming the first CFTC-approved options trader, investors finally have a regulated way to invest in cryptocurrency.

Institutional Investor

August 7, 2017

By Robert Stowe England


So far, hedge funds are virtually the only institutional investors to put funds at risk in digital currency assets.

Pension funds and other traditional institutions have continued to avoid the asset class, even as they watch returns soar from the sidelines. The total value of cryptocurrencies has more than doubled in value this year, reaching a market cap of $118 billion as of Monday – including $54.9 billion in Bitcoin and $25.1 billion in its upstart rival Ethereum, according to cryptocurrency tracker CoinMarketCap.

But more traditional institutional investors may consider investing in digital currency after the Commodity Futures Trading Commission decision July 24 granting New York-based LedgerX a license to operate as a derivatives clearing organization for digital currencies. When the company launches its exchange and clearing house this fall with Bitcoin puts and calls, it will mark “an important milestone for the ecosystem broadly,” said Paul Chou, co-founder and chief executive officer of LedgerX. “This is the first time that we’ve seen, either here in the United States or globally, a national regulator recognize a clearing house that’s dedicated to clearing digital currencies.”

LedgerX’s stamp of approval from the CFTC is garnering kudos. “What LedgerX has accomplished is truly unique and groundbreaking,” said Daniel Gallancy, founder and chief executive officer of SolidX, a New York-based blockchain technology company. SolidX’s bid to list a Bitcoin exchange-traded fund (ETF) on the New York Stock Exchange was rejected by the U.S. Securities and Exchange Commission in March, shortly after the agency turned down the listing of a bitcoin ETF by investors Cameron and Tyler Winklevoss on the Bats BZX Exchange. The SEC said in April it would review an appeal of its decision to reject the Winklevoss twins’ ETF.

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