LedgerX is known as the clearing house that focuses on the derivatives of cryptocurrency. It is also registered as Derivatives Clearing Organization (DCO) and Swap Execution Facility (SEF).
Undeniably, since the launch of bitcoin back in 2009, cryptocurrencies have become extensively popular. Hundreds of them have been formed with a variety of them designed specifically to fund projects and companies that are bereft of traditional financing.
For regulators who are putting efforts to comprehend if existing rules regulating Bonds, stocks and other financial instruments will be good enough to cover up the digital assets, this acted as a headache
Managers and supervisors have been assigned the task to make sure that investors stay protected. However, since the process of rulemaking may take years altogether to get an outcome, they are trying to catch up with rapidly evolving technologies.
For instance, not until 2017 Securities and Exchange Commission (SEC) would signify when cryptocurrency tokens will be regarded as securities. Also, in 2017, the Commodity Futures Trading Commission (CFTC) allowed LedgerX the Derivatives Clearing Organization (DCO) license, enabling it to register as the clearing house for several derivatives contracts. For CFTC, it took almost three years to get to this conclusion.
The shift from selling and purchasing individual tokens to derivatives turned out to be a significant step toward the acceptance of cryptocurrencies as the mainstream financial instruments. In simple words, derivatives enable investors to acquire cryptocurrencies exposure without buying an Ethereum or Bitcoin token.
Simply, investors can now buy currency futures; Exchange Traded Fund (ETFs) or equities options. This leads to cryptocurrency investment to be more affordable as getting exposure by purchasing a token could be costing a lot more to investors.
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Also, clearing houses, such as LedgerX, offer safety, predictability and transparency for options and futures contracts that seem to be unavailable in options provided by non-clearing houses. They let investors sell or purchase cryptocurrency calls and puts, which might help decrease the wild fluctuations in cryptocurrency values by enabling investors to put bet against extreme situations.
And then, to become successful, LedgerX has to attract higher volumes of a contract to assure investors that cryptocurrency derivatives are ideal investments. However, this is nowhere different from exchanges where cryptocurrencies are usually sold, such as Coinbase.