LedgerX has launched the first BTC savings product licensed with both a CFTC derivatives clearing organization (DCO) license and a swap execution facility (SEF) license.
Trading and clearing platform LedgerX has launched a new Bitcoin (BTC) savings product that is licensed by the US Commodities Future Trading Commission (CFTC), Forbes reported May 15.
The savings product introduced by LedgerX is certified by a CFTC derivatives clearing organization (DCO) license and a swap execution facility (SEF) license. Juthica Chou, Chief Operating Officer at LedgerX said:
“Everything we do requires both the licenses. And a lot of that is intentional, because by making it a package deal we can offer a number of services to our customers in a really clear, vertically integrated way.”
The licenses permit users to earn a yield on their Bitcoin assets. Rather than just “hodling” and hoping that Bitcoin appreciates, investors can earn a fiat-based yield on their BTC by employing what is referred to as a call overwrite technique, wherein an investor deposits BTC into LedgerX, then sells a call option at a slightly longer date, with a higher strike call option.
The project is designed to simplify BTC option trading to a basic point-and-click format, so “less sophisticated” bull traders can potentially get a premium price on their holdings. The product’s interface allows users to choose the implied rate they’re anticipating to earn and the number of BTC they wish to earn the yield on. Chou said:
“This interface will definitely be skewed to the long Bitcoin holders, who will likely only deposit bitcoin and who will want to earn interest off of that Bitcoin.”
According to Forbes, during the past three months, 70 percent of the trade volume of LedgerX has come from options, with an average trade size of $60,000. The options contracts will reportedly be available for a three-month and a six-month duration, while LedgerX charges a transaction fee for each service.
Yesterday, the Chicago Mercantile Exchange launched an Ethereum reference rate and real time index to the US dollar. The rates are offered in partnership with Crypto-Facilities, a UK-based digital asset exchange, that debuted the “first regulated” Ethereum futures last week.