LedgerX Launches CFTC Regulated Bitcoin Savings Product
LedgerX, a regulated institutional trading and clearing platform, has announced the launch of Bitcoin (BTC) savings account product called “LedgerXSavings.” LedgerX is authorized by regulators to facilitate buying and selling of spot Bitcoin, derivatives, and all kinds of specialized cryptocurrency swaps.
LedgerX, which is licensed by the CFTC (Commodities Futures Trading Commission) as both a Derivatives Clearing Organization DCO) and a Swap Execution Facility (SEF), is basically offering a way for Bitcoin investors to earn interest, instead of simply waiting for the price to go up. The product allows investors to utilize a “call overwrite” options strategy. The advantage is that Bitcoin investors need not know anything about derivative trading to use this product.
LedgerX has brought this product after seeing many of its clients deposit Bitcoins in their LedgerX account and then sell a call option with a future expiry date (typically three, six or even twelve months later). LedgerX clients generally preferred to sell at a price higher than the prevailing spot price. LedgerX’ savings product precisely uses this strategy. However, a user has to simply use the interface to deposit Bitcoins and choose the maturity period. No further action is required on the part of the user. Interest varies between 11% and 15%, depending on the maturity period chosen by the user.
The USD collected is calculated as an approximate yield and updated in real time. Upon selecting the LedgerSavings product for the desired maturity, the USD amount is available to you immediately to withdraw. The associated BTC is locked for the duration of the savings product.
At maturity, if BTC is approximately 2X the current price, the investor will exchange BTC for 2X the amount of the prevailing spot price today. Otherwise, the investor will receive BTC back and keep the USD interest.
Juthica Chou, Co-founder and Chief Operating and Risk Officer at LedgerX told Forbes
“This interface will definitely be skewed to the long bitcoin holders, who will likely only deposit bitcoin and who will want to earn interest off of that bitcoin.”