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Cryptocurrency Derivatives Platform LedgerX Will Launch Ether Options: Report

Last Updated March 4, 2021 3:44 PM
Josiah Wilmoth
Last Updated March 4, 2021 3:44 PM

Institutional bitcoin derivatives platform LedgerX is reportedly preparing to expand its cryptocurrency product line to include ether, the native asset of Ethereum.

The U.S. firm, which was the first trading platform to receive approval from the Commodity Futures Trading Commission (CFTC) to list bitcoin derivatives, has developed a line of ether options and is ready to roll them out once it gets the go-ahead from regulators, industry publication The Block  reports.

While LedgerX has not confirmed the news publicly, the report cites a source familiar with the company who says that the rollout could follow a CFTC meeting on Oct. 5, if regulators at the agency are sufficiently comfortable with the product.

LedgerX began offering bitcoin derivatives in Oct. 2017, two months before CBOE and CME launched their bitcoin futures contracts. At present, the firm offers next-day swaps, which are essentially one-day futures contracts settled in “physical” bitcoin, and options, which allow traders to purchase the right to buy or sell an asset at a particular price at an agreed-upon point in the future. Now, it wants to make these products available for ether, too.

Importantly, these options would allow traders to short the ethereum price, creating what’s known as a two-sided market for the second-largest cryptocurrency. While the creation of ethereum derivatives may lead to short-term price decreases — some research has connected this year’s cryptocurrency market decline to the launch of the first regulated bitcoin futures — they arguably contribute to more efficient price discovery, which could aid in making institutions more comfortable with cryptocurrency as an asset class and ether as an individual token.

Professional investors and cryptocurrency miners can also use options trading to hedge profits and reduce risk associated with price volatility.

If LedgerX does bring an ether product to market, it likely will not be long before CBOE — which is on record expressing its desire to add more cryptocurrency products — lists an ethereum futures contract as well. CME, as CCN.com reported, has released an ether price index but has been more guarded on its future plans for the cryptocurrency.

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