Leading US Exchange, FTX, Ventures Into Derivatives With LedgerX Acquisition

FTX.US, one of the largest cryptocurrency exchange platforms in the US, has announced that it has acquired LedgerX, a leading derivative service provider in the US. However, the financials for the deal have not been disclosed.

LedgerX is a crypto derivatives exchange platform that is fully licensed by the Commodity Futures and Trading Commission (CFTC). In 2020, the CFTC issued LedgerX with a derivatives clearing organization licence that allowed the firm to offer a wide range of complex crypto contracts.

Since 2017, LedgerX has handled more than 10 million crypto options and swap contracts. The firm also states that it is behind the launch of Bitcoin mini contracts that allow investors to access granular trading.

Significant Milestone for the Exchange

In the announcement, the president of FTX, Brett Harrison, stated that the acquisition was a major milestone for the fast-evolving US crypto market. He also added that it was among the exchange’s strategies to offer regulated crypto derivatives services to US clients.

“We believe the integration of our technological capabilities, product portfolio and large balance sheet with LedgerX will enhance our ability to provide innovative products to all US cryptocurrency traders. We’re excited to take this step and work with US regulators to ensure compliance with the existing derivatives licensing regime,” Harrison added.

The announcement by FTX also stated that merging the two firms will ensure the exchange can accommodate the increasing needs of both retail and institutional investors.

The founder and CEO of LedgerX, Zach Dexter stated that the potential of the US crypto derivatives market was big. He added that the derivatives platform had invested time and resources to get regulatory approval, and FTX.US would benefit from this.

“FTX.US has taken the view, which we share, that US regulators are ready and willing to partner on innovative products, and it’s the responsibility of the industry as a whole to step up and work with agencies like the CFTC,” Dexter added.

In-Line with FTX’s Plans

During the announcement, FTX stated that it was pushing for the crypto ecosystem to embrace regulations. In an earlier interview, Harrison stated that the exchange was seeking regulatory approval to offer crypto derivatives in under 12 months. During the interview, Harrison stated that the approval could come through an acquisition.

With the acquisition of LedgerX, the derivatives platform will now be under the wing of FTX.US, this giving the exchange the incentive needed to start offering crypto derivatives in the US. During the announcement, FTX stated that it would create a solid relationship with US regulators and work closely with the CFTC. LedgerX’s CEO, Dexter, supported this statement.

FTX’s CEO, Sam Bankman-Fried, has in recent weeks been a major advocate for crypto regulations. In an earlier tweet, the CEO had also stated that the acquisition was probably one of the most exciting for the exchange.

The development is also in line with FTX.US’s explosive growth in terms of crypto trading volumes. The recent crypto market rebound has also played a role in the increased trading volumes across major exchanges.

The news by FTX to venture into regulated derivatives trading comes as the leading global exchange Binance has shut down crypto derivatives products in several countries because of a regulatory crackdown. The exchange has winded down derivatives offerings across Europe, Hong Kong and Brazil.

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