U.K. Photographer: Luke MacGregor/Bloomberg Cryptocurrency asset management platform LedgerX has launched a new bitcoin savings product aimed at serving bitcoin investors who want to buy—and hold. Launched today, the first bitcoin savings accounts to be offered by a company with two different CFTC licenses allow investors to earn a yield in fiat on their bitcoin holding. Instead of just sitting on the cryptocurrency and hoping it appreciates, the LedgerX Savings product lets investors—or savers as the case may be—do what’s called a call overwrite. The investing technique, where a person deposits bitcoin to LedgerX then sells a call option at a slightly longer date, with a higher strike call option, has proved to be one of the New York City-based startups most popular services using the existing options service. But with the new savings product, that process is reduced to its most basic point-and-click functionality, designed in part to make it easier for less sophisticated bitcoin bulls to potentially receive a premium in U.S. dollars for selling the option. As the CFTC looks to take a more aggressive stance toward some unlicensed bitcoin companies, the LedgerX product that requires both a CFTC derivatives clearing organization (DCO) license and a swap execution facility (SEF) license signals an increasing level of sophistication being offered to bitcoin users. “Everything we do requires both the licenses," said Chou in an interview at her New York City headquarters. "And a lot of that is intentional, because by making it a package deal we can offer a number of services to our customers in a really clear, vertically integrated way.” The new savings interface lets a user select the implied rate he or she is looking to earn and the number of bitcoins he or she hopes to earn the yield on and then submit it to the same LedgerX matching engine that powers the existing bitcoin options product. The options contracts will initially be offered for transactions over a three-month duration and a six-month duration, and LedgerX is charging a transaction fee for each service. Chou expects to see high volumes on this product, as it was designed to serve the use-patterns of LedgerX’s existing customers. She estimates that more than half the company’s volume comes from using similar techniques, but following a much more complicated workflow. Over the past three months, LedgerX has averaged $30 million in notional transactions per month, with an average trade size is $60,000, she said. Seventy percent of that volume comes from options, with the rest being swaps. In a potential sign the bitcoin users are looking for more advanced ways to both place long bets and short the cryptocurrency, which is currently valued at $149 billion, Chou says 20% of the company’s volume since it launched has been generated in the past three weeks. However, over that same period, the price of bitcoin has dropped by 5% percent, from $9,191 on April 24 to $8,715 today. At its peak price last year, a bitcoin was trading for nearly $20,000. While Chou says it is exactly this volatility that makes the call overwrite such a potentially attractive investment opportunity, she acknowledges the unpredictability might not be attractive to everyone. “This interface will definitely be skewed to the long bitcoin holders,” she said, “who will likely only deposit bitcoin and who will want to earn interest off of that bitcoin.”
Trading and clearing platform LedgerX has launched the world's first bitcoin savings account, with two licences from LederX. The account offers traditional savings facilities, as well as an overwrite, which has proved to be popular among customers. Some analysts have said the US Commodity Futures Trading Commission's move demonstrates the increasing sophistication of the digital currency sector.