LedgerX has introduced a Bitcoin savings product licensed by the CFTC. The Bitcoin asset management platform has designed this new product ...
LedgerX has introduced a Bitcoin savings product licensed by the CFTC. The Bitcoin asset management platform has designed this new product to cater to long-term hodlers.
The LedgerX Bitcoin ‘Call Overwrite’
Launched on May 15th, the LedgerX Bitcoin savings account enables investors to earn a fiat-based yield on their Bitcoin holdings. Instead of hodling in the hope of a significant price increase, savers can now earn revenue from a call overwrite. Usually, overwrite contracts are for assets that are deemed to be undervalued or overvalued. The trader overwrites calls if the latter is the case and overwrites puts if the former is the case.
With this investment technique, traders deposit Bitcoin in their LedgerX accounts. The trader then sets a call option sold at a longer date with an accompanying slightly higher strike call option. LedgerX already offers similar trading techniques, but this new product makes the process a lot less complicated.
The new Bitcoin savings account will enable less finance-savvy investors to earn USD premiums on their Bitcoin holdings. Traders have the freedom to select both the number of bitcoins and the premium rate. Options contracts on the new account will be offered in both three months and six months duration. LedgerX will also charge a transaction fee for the product.
CFTC Regulations
LedgerX’s new Bitcoin savings account is provided under license from the CFTC. The company has both the CFTC derivatives clearing organization (DCO) and the swap execution facility (SEF) licenses. In an interview with Forbes, Juthica Chou spoke about the importance of being a licensed Bitcoin company. The LedgerX co-founder and CTO said that the company’s products are all in compliance with statutory regulations. She also said LedgerX takes a deliberate approach to ensuring that it stays within the confines of the law.
Commenting on the new product, Chou expressed optimism that it would become a favorite of the company’s customers. The LedgerX CTO based her confidence on the current trading pattern already established in the company. According to Chou, more than 70 percent of LedgerX’s trading volume comes from similar Bitcoin options contracts.
Last quarter, the company also recorded a notional transaction average of $30 million per month. Another reason for Chou’s optimism is the Bitcoin volatility which makes call overwrites an attractive investment strategy.
Will the LedgerX Bitcoin savings account encourage more long-term holding of the cryptocurrency? Let us know in the comments below.
Images courtesy of Twitter/@ledgerx and Shutterstock.
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