Are cryptocurrencies securities?
There is no statement defining whether or not digital currency will be categorized as securities by the U.S. government.
With an announcement like this, we may be lead to believe there is a high probability the government can be closer to defining cryptocurrency as securities under the umbrella of cryptocurrency derivatives.
What are cryptocurrency derivatives?
To understand crypto derivatives, we must first understand traditional derivatives. A derivative is an asset contract between two or more parties. Derivatives may be traded and exchanged. Therefore, a crypto derivative is a contract between two or more parties based upon cryptocurrency.
“This interface will definitely be skewed to the long bitcoin holders,” said Paul Chou, founder of LedgerX, a former derivatives trader in Goldman Sachs’ securities division, “who will likely only deposit bitcoin who will want to earn interest off of that bitcoin.”
Currently, LedgerX, a bitcoin trading platform, is leading the ecosystem in launching crypto derivatives.
LedgerX is the first SEC regulated U.S. cryptocurrency derivative exchange. The platform holds two different CFTC licenses. In the first week of the launch, 176 contracts were traded.
After the first week, the volume of derivative contract trading ballooned to a 40% monthly increase. There are now 2,000 open interest contracts on the LedgerX platform.
Source: ICO Alert