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34.LEDGERX(Published: 28th Jul, 2017)
LedgerX, LLC(LedgerX) is a company developing an institutional derivatives exchange and clearing platform for digital currencies based in New York. It is founded by Goldman Sachs, MIT and CFTC alumni, who are expertises in future and option markets and have regulatory and technological backgrounds. Major investors of the company include Huiyin Blockchain Venture, a blockchain focused venture capital based in China, and Miami International Holdings, the parent holding company of the MIAX Options Exchange in the US. The company has finished its Series B funding in May 2017.

Recent Development
In June 2017, its registration at the Swap Execution Facility, SEF)was completed and in July 2017, it was approved by the US Commodity Futures Trading Commission(CFTC) to become a Derivatives Clearing Organization(DCO) under the Commodity Exchange Act(CEA). It is the first digital currency options exchange and clearing platform that is under the official regulation of the US government. It took 3 years for LedgerX to finally get the approval from the CFTC. It is expected that future and option contracts(1-6 months) for Bitcoin will be available in September 2017 and those for other digital currencies such as Ethereum and Litecoin will be presented later.

Upon the approval by the CFTC, LedgerX became the first digital currency options exchange and clearing platform platform that is federally regulated. It is a milestone in the development of digital currencies as they start being accepted by the major financial market and people will have more faith in them. Before regulation, investors can lose all their investment due to fraud while not being able to sue their losses. Now, investors can send their cases to courts if they suffer from frauds when using the LedgerX platform. LedgerX will help inject confidence in the market and it is anticipated that people will gradually shift to platforms that are regulated by the government. People do not prefer riskier option given the same return. Regulated platforms may become a trend in future digital currency world and those unregulated may be out of steps with the society.

LedgerX has the potential to become one of the leading digital currency platform in the US, or even in the world. Apart from the confidence reason, being regulated gives them an upper hand in the competition in gaining banks’ supports. According to the word of Paul Chou, the CEO of LedgerX, the banks they are working with have combined assets nearly 500 billion dollars. Such engagement level with the banking system will facilitate an effective operation of the platform and it will be a driving force to more fundings in the future. Furthermore, CFTC has recently formed an agreement with international regulators for an ‘equivalence’ arrangement, which will allow existing federally regulated institutions to acquire equivalent licenses in other countries. This will greatly enhance the competitiveness of platforms like LedgerX in the world market and accelerate their plans for global expansion.
It is expected that more companies involving digital currency transactions will seek for collaboration with official organizations and more will be regulated. The early birds like Coinbase and LedgerX will have advantages in the markets and those unregulated platforms may be ruled out from the markets or forced to cease operations upon requests by the authorities.

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