FTX acquires LedgerX, launching the first shot in the US crypto derivatives market "beachhead landing war"

FTX.US, the US-based subsidiary of FTX, announced today that it will acquire LedgerX, a cryptocurrency derivatives trading platform regulated by the Commodity Futures Trading Commission (CFTC). The terms of the transaction have not been disclosed and are expected to be completed by October 2021. It will not have an impact on LedgerX's operations as the exchange will continue to offer its existing products to its existing customer base.

But for FTX, this move is of great significance. Once the acquisition is completed, given the long-term close cooperation between LedgerX and CTFC, FTX.US will be able to obtain a complete set of derivatives-related compliance certificates in one fell swoop, so that it can directly provide Bitcoin and Ethereum options and futures contracts to retail and institutional traders.

FTX has been offering a variety of financial products, including crypto derivatives, to users on its platform, but due to compliance concerns, the platform has not been promoting these products to U.S. investors.

In summary, the importance of this acquisition is self-evident, as can be seen from the comments made by FTX founder and CEO SBF on the acquisition. He tweeted on Tuesday, "This may be one of the most exciting announcements we have ever made."

Cryptocurrency derivatives, such as Bitcoin futures, allow investors to freely enjoy the corresponding risk exposure without actually holding the underlying assets. They provide investors with a unique way to bet on the price of cryptocurrencies and also provide the possibility of hedging their asset volatility.

As Bitpush reported earlier, SBF also said in an interview with Forbes that the public has certain misunderstandings about crypto derivatives. He believes that in most cases, the existence of crypto derivatives has improved market liquidity and transaction efficiency, and only in "a few" cases has it produced certain negative effects. He also said that derivatives and leverage services are not original to the crypto market, and have existed in the traditional capital market for a long time, and investors should view these issues with a neutral attitude.

Other popular cryptocurrency derivatives currently include options and perpetual contracts, which allow investors to buy or sell an asset at a specified price on a predetermined date.

Earlier this month, Brett Harrison, president of FTX.US, revealed in an interview with Decrypt that the exchange is working to add cryptocurrency derivatives trading to its platform and is considering two ways to achieve this goal: either applying for its own license or acquiring other companies that already have such a license. Now they have obviously chosen the latter, which is faster. As for the reason for making this choice, to a certain extent, it is also because the market competitors are gradually increasing. In this case, it is obviously the best choice to seize the market faster. At present, FTX.US only supports spot trading of specific cryptocurrencies, including Bitcoin, Ethereum, Litecoin and Tether (USDT).

FTX.US officials emphasized that it will "invest significant resources to develop a closer working relationship with the U.S. regulatory community, especially with the CFTC," with the ultimate goal of meeting the "strict standards of the U.S. financial services industry."

In the U.S. market, FTX.US is currently one of the top six cryptocurrency exchanges offering spot trading. According to data from Coingecko, its 24-hour trading volume is just under $400 million, which is a far cry from heavyweight exchanges like Coinbase and Kraken, which have trading volumes of $5.9 billion and $1.5 billion, respectively.

However, once the exchange is able to open derivatives trading, FTX.US’s user base and trading volume will most likely begin to grow exponentially. Currently, the Chicago Mercantile Exchange (CME) is the only compliant exchange in the United States that offers Bitcoin and Ethereum futures and options.