Crypto Exchange FTX Buys LedgerX, How They Will Move Into The Derivatives Sector

Crypto exchange FTX and its U.S.-based affiliate FTX.US continue to expand in and beyond the space. CEO of FTX International Sam Bankman Fried confirmed that the platform acquired Bitcoin and Ethereum derivatives exchange LedgerX.

This platform has been licensed by the Commodity and Futures Trading Commission (CFTC) and will allow FTX.US to offer crypto-based derivates to U.S. citizens. Their products are comprised of futures contracts, options, and swaps on BTC and ETH. The purchase was made for an undisclosed amount.

The deal is set to close as early as October 2021. Thus, FTX will be able to compete with U.S.-based crypto exchanges Coinbase, the Chicago Mercantile Exchange (CME), and Gemini. The CEO of FTX.US Brett Harrison said:

“We want to plant our flag in something that is uniquely ours. Going into the derivatives market is such a natural extension…FTX International has two years of running an exchange with $500 billion monthly volume in derivatives without seeing serious liquidations or having nearly any downtime. It feels like this is clearly within our wheelhouse.”

On the other hand, Bankman Friend called this acquisition one of the companys must “exciting” announcements since its inception. In addition, he expressed his excitement to work with the CFTC on “innovation in the U.S. crypto derivatives space in a regulated, understood manor”.

The crypto derivatives sector attracted a lot of attention from politicians, and regulators in the U.S., high ranking members of this country's Senate are particularly concerned about some products that enable users to take up to 100x in leverage positions.

As a consequence, many crypto exchanges have been changing their Know Your Customer (KYC) and Anti Money Laundering (AML) policies, making them mandatory. Also, Binance and other platforms reduced the amount of leverage available for their users.

Crypto Exchange FTX.US And Its Efforts To Work With Regulators

The CEO of FTX International thanked Harrison, and Zach Dexter, co-founder, and CEO of crypto derivatives platform LedgerX. Dexter said the following on their partnership:

“(…) we honestly couldn‘t have found a better partner for US crypto derivatives than the @ftx_us team. Sam Bankman Friend (@SBF_FTX), Brett Harrison (@Brett_FTXUS) & Ryne Miller (@_Ryne_Miller) are committed to working with regulators. we’re going to go a very long way together.”

In an interview with CNBC, the CEO of FTX.US Harrison was asked if the LedgerX acquisition hints at more regulations for cryptocurrencies. Harrison emphasized that crypto derivatives are already regulated via a regiment enforced by the CFTC.

However, the crypto spot market lacks a “similar” framework to that of equities exchanges in the traditional market. Therefore, he added the following:

“It'll be interesting to see where we head in the future. The SEC, the CFTC, some jurisdiction between them, in terms of coming up with an actual framework for cryptocurrencies and how that might relate to the existing derivatives regime (…).”

At the time of writing, Bitcoin trades at $46,938. The first cryptocurrency by market cap has seen selling pressure in the past week, as it was rejected from the lows at $50,000.

BTC moving sideways in the daily chart. Source: BTCUSD Tradingview

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