1/ As FTX US continues on its path to offering crypto futures and options trading, we’ve had a really good few days in DC. We’re very excited about FTX US’s acquisition of @ledgerx and the ways in which it will change US crypto markets and derivative markets in general.

8:43 PM · Oct 6, 2021

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2/ Derivatives (e.g. futures and options) have a well-established regulatory framework and licensing regime in the US, set forth by the CFTC. Exchanges like the CME and ICE have been able to list Bitcoin futures in the US for some time because they have the required licenses.
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3/ CME and ICE do not offer these products to retail investors directly. Instead, retail must rely on FCMs (Futures Commission Merchants) to act as intermediaries on their behalf, which are typically banks or other large institutions.
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4/ CME/ICE also do not offer their market data for free or in an easily accessible way. Retail users can’t go on these exchanges’ websites, sign up for an account, see order books for free, and place trades.
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5/ LedgerX is the only crypto-native CFTC-regulated crypto derivatives exchange that has obtained all three of the following licenses:
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6/ DCM (Designated Contract Market): the exchange license that allows LedgerX to host derivative order books
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7/ DCO (Derivatives Clearing Organization): LedgerX’s DCO license specifically lets it clear derivatives trades in a disintermediated model, allowing retail to trade directly without FCMs
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8/ SEF (Swap Execution Facility): allows institutions to trade swaps on LedgerX
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9/ Applying for these licenses de novo (from scratch) is a long and deeply involved process. LedgerX and @zachdex spent the better part of 5 years on this, through sustained, cooperative work with the CFTC. There’s a reason they’re the only ones who have accomplished this!
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10/ With LedgerX, and following the guidance and approval of the CFTC, FTX US (uniquely) will be able to:
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11/ - Offer licensed crypto futures and options trading to US retail customers. When that happens, customers will be able to enjoy the same user experience they currently have with our spot exchange, including the apps, the website, and the free and open market data.
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12/ - Offer licensed crypto futures and options trading to institutions. Game on, CME and ICE! We think more competition in this space will be a good thing.
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13/ - Provide clearing services for other crypto exchanges looking to offer crypto derivatives trading to retail. Both a DCM and DCO are required to engage in this business, so crypto exchanges that get the DCM but not the DCO will likely need to partner with us for clearing.
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14/ Lastly, LedgerX’s CFTC licenses aren’t specific to crypto, so the acquisition creates the opportunity for FTX US to move further into traditional asset classes like equity index futures, also with the goal of making them available to retail.
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15/ (Separately from the acquisition, we’re making steady progress on offering stock trading to retail users as well.)
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16/ Our goal is to be the US-regulated exchange and platform where you can trade everything. Our acquisition of LedgerX brings us several large steps closer to this.
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17/ Going back to Chicago now to finish NFTs, for everyone who is asking :-)
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