LedgerX has been trying to get approval of its amended Derivatives Clearing Organization (DCO) registration since June. This was mainly to start offering the first physically-delivered bitcoin futures in the United States. Initially, there were reports that the U.S. Commodity Futures Trading Commission (CFTC) had already approved of the license.
However those reports were soon put to rest as news emerged that LedgerX’s license approval was on hold. The delay has upset the top brass at LedgerX who now claim that the CFTC is stalling the approval of their license because its chairman has a personal bias against the company and its CEO Paul Chou.
The accusation was made in a letter that detailed the bias that CFTC chairman J. Christopher Giancarlo has against LedgerX.
In a statement, LedgerX wrote that
Giancarlo told him that he was going to make sure our DCO order was revoked within two weeks, due to a blog post written by myself the previous year implying that preferential treatment was being given to larger companies so he could ‘cement his legacy’. This refers to the ICE / Bakkt approval, which was running into issues that were frustrating the chairman.
The actual blog post being referred to was not specified in the letters but LedgerX believes that the Giancarlo’s bias is the driving force behind the delays of their approval. The company initially had an advantage over its competitors because of its early application but its competitors like Bakkt now have a chance to catch up.
Besides the delay in the approval, LedgerX says that it has faced other obstacles. It has been asked to get more insurance and conduct an SOC 1 Type 2 audit. Additionally, CFTC staffers are supposedly trying to interfere with the audit process, trying to use it as a reason to revoke the license approval.
Still No Definite Approval Date
Even with the extensive delay, there is still no indication as to when the CFTC will make a decision on the LedgerX license application. There are a number of challenges that LedgerX will have to face in the coming days. One of these challenges is that the CFTC’s swap data repository requirements will require LedgerX to submit their reports to the Intercontinental Exchange’s ICE Trade Vault. The problem with this is Intercontinental Exchange is a major competitor of LedgerX.
LedgerX filed a complaint that reported this fact but is yet to receive a response. In a later interaction with the CFTC, a division head is alleged to have admitted that certain companies were receiving preferential treatment from the CFTC Chairman.