FTX's derivatives wing withdrew a proposed plan to directly settle crypto derivatives products from the Commodity Futures Trading Commission (CFTC) on Friday.
The story was first reported by Bloomberg.
LedgerX, which does business as FTX US Derivatives after being acquired in 2021, filed a plan to directly settle crypto derivatives, cutting out intermediaries, earlier this year. The move met with opposition from traditional financial players, such as Cboe, which warned that there may be investor safeguard and protection concerns.
The proposal was under review by the Commodity Futures Trading Commission (CFTC), which oversees derivatives products in the U.S. CFTC Chair Rostin Behnam, while not endorsing the plan directly, nonetheless called it "unique" earlier this year. "I think this is potentially – and I emphasize the 'potential' – another phase in the evolution of market structure, innovation and disruption," he said at the Financial Markets Quality Conference last month.
In March, then FTX.US President Brett Harrison explained that FTX U.S. Derivatives’ current derivatives clearing organization license requires full collateralization of derivative positions through an intermediary. FTX’s application had sought to amend that to allow for direct-to-consumer margined derivatives trading for retail and institutional customers. The change would allow derivatives risks to be “transparently assessed and mitigated in real time” because of FTX’s almost continuous setting of margin levels, Harrison said.
Update on 11/14 at 14:28 UTC: CFTC confirms that FTX US Derivatives on Friday formally withdrew its application.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.