Ledger Holdings Inc

1110 Brickell Avenue 

Suite 430k-200 

Miami, FL 33131 

https://ledgerx.com

February 19, 2021

VIA COMMISSION PORTAL

Christopher J. Kirkpatrick

Secretary, Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, N.W.

Washington,	D.C.		20581

Re: Commission Regulation 40.2(a) – Certification of Prepaid USDETH Deci Futures

LedgerX LLC Submission No. 21-06

Dear Mr. Kirkpatrick:

LedgerX LLC (“LedgerX”) hereby notifies the Commodity Futures Trading Commission (the 

“Commission”), pursuant to Commission Regulation 40.2(a), that it is certifying the Prepaid 

USDETH Deci Futures (the “Company Contract”) for trading on LedgerX’s designated contract 

market (“DCM”).

LedgerX will list the Company Contract no earlier than March 6, 2021.

1

This certification includes the following:

• The submission cover sheet, which shall be generated through the Commission’s submission 

portal at the time of filing.

• A concise explanation and analysis of the Company Contract, attached as Exhibit A.

• A copy of the Company Contract’s rules, which will be published as contract specifications 

on LedgerX’s website, attached as Exhibit B.

• A concise explanation and analysis of the Company Contract’s compliance with applicable 

provisions of the Commodity Exchange Act (the “CEA”), including the Core Principles, and 

the Commission’s Regulations thereunder, attached as Exhibit C.

• A deliverable supply analysis, attached as Exhibit D.

1 Concurrently with this filing, LedgerX has also filed certain amendments to the LedgerX Rules, which will become 

effective on March 6, 2021, pending all relevant CFTC regulatory review periods (the “March 2021 Rule 

Amendments”). Therefore, notwithstanding the earlier self-certification of this contract pursuant to CFTC 

Regulation 40.2(a), LedgerX expects to list the Company Contract for trading beginning on March 6, 2021.
Ledger Holdings Inc

LedgerX certifies that the Company Contract complies with the CEA and Commission Regulations 

thereunder. LedgerX additionally certifies that it has concurrently posted a copy of this submission 

letter and the attachments hereto on LedgerX’s website at https://ledgerx.com/.

* * * *

Please contact the undersigned at gc@ledgerx.com if you have any questions or you would 

otherwise like to discuss this further.

Sincerely,

Brian G. Mulherin

General Counsel, LedgerX LLC
Ledger Holdings Inc

Exhibit A

Below is a concise explanation of the Company Contract: 

The Company Contract is a USD-priced prepaid Future on 1/10th of an Ether (ETH). The Company 

Contract, which is prepaid by the buyer at the time of order execution and physically settled by the 

Seller on the settlement day/time, provides (subject to the following paragraphs) a Company 

Contract buyer with ETH and a Company Contract Seller with USD. 

Prior to accepting an order for the purchase or sale of a Company Contract, LedgerX shall review 

the Participant’s Collateral Account to ensure the Participant can fully collateralize the 

Participant’s obligations under the Company Contract. See Rules 6.1.A and 7.1. 

Prior to placing a bid to purchase one or more Company Contracts, a prospective Buyer must post 

to LedgerX the USD bid amount of each Company Contract it wishes to purchase, the aggregate 

amount of which will be debited from such Buyer’s Participant Account on the Initial Payment 

Date in satisfaction of such Buyer’s delivery obligation under each such Company Contract. At 

settlement, the Buyer will receive physical delivery of 1/10th of an ETH for each Company 

Contract purchased. 

Prior to placing an order to sell one or more Company Contracts, a prospective Seller must have 

available for trading in its Participant Account an amount of ETH at least equal to the amount 

deliverable at the maturity of those Company Contracts. Once the Company Contracts are 

executed, LedgerX will hold seller’s collateral unencumbered pending Settlement (i.e., the amount 

of ETH seller is required to deliver at maturity will be locked and unavailable for any other trade 

or withdrawal while the Company Contracts remain open). See Rule 7.2. Seller will then be 

credited with USD in an amount equal to the related offer price of such Company Contracts. On 

the Final Payment Date, the Seller’s Participant Account will be debited 1/10th of an ETH for each 

Company Contract sold. 

For more information, the Company Contract’s contract specifications are attached as Exhibit B.
Ledger Holdings Inc

Exhibit B

Rule 12.16 USD/ETH Deci Futures

A. Contract Description. A Participant may enter into a Company Contract as a buyer, 

whereby such Participant will pay USD and receive ETH, or as a seller, whereby such 

Participant will pay ETH and receive USD. The Company Contract requires that a buyer 

pay USD on the Initial Payment Date, and that the seller pay ETH on the Final Payment 

Date. This Rule 12.16 pertains to Futures on ETH (as described further herein) and 

contains general Company Contract terms and conditions. 

B. Ethereum. Ethereum is a computer network and protocol that allows digital currency to 

be stored and transferred in a distributed manner without the need for a central 

intermediary. The Ethereum network is a form of blockchain, which allows consensus to 

be built and maintained on a distributed, decentralized basis by parties with no inherent 

reason to trust one another. Each individual Ethereum transaction is validated by the 

network of decentralized parties, or nodes, over a period of time and then added to a 

“block”, which is then cryptographically linked to the immediately preceding block (over 

time, creating a chain, or a “blockchain”). 

C. Trading Hours. The trading hours of the Exchange’s Designated Contract Market that are 

applicable to the Company Contract described in this Rule 12.16 will be 24 hours a day, 

seven days a week or as otherwise determined by the Exchange from time to time as 

disclosed on the Website and through Participant Notice. 

D. Currency. The currency applicable to USDETH Deci Futures will be United States dollars, 

which will be expressed in dollars and cents per ETH. 

E. Underlying. The underlying applicable to USDETH Deci Futures will be Ether.

F. Contract Size. Each USDETH Deci Future will be for 1/10 Underlying (i.e., one-tenth 

ETH). 

G. Listing Cycle. LedgerX shall post in a location on its website available to Participants a 

list of Company Contracts that are available for trading. At a minimum, that list shall 

include Company Contracts maturing on each of the four nearest Fridays, plus Company 

Contracts that mature on the last Friday of each of the following three calendar quarters.

H. Position Limits. As of any date of determination, no person will own or control positions 

in excess of 1,000,000 USDETH Deci Futures. 

I. Collateral. All Company Contracts will be fully collateralized. Before the Exchange’s 

Designated Contract Market will accept a buy order for one or more USDETH Deci Futures 

from a Participant, such Participant must have sufficient USD available for trading in its 
Ledger Holdings Inc

account to satisfy its payment obligations on such Company Contract(s). Before the 

Exchange’s Designated Contract Market will accept a sell order for one or more USDETH 

Deci Futures from a Participant, such Participant must have sufficient ETH available for 

trading in its account to satisfy its delivery obligations on such Company Contract(s). 

J. Conventions.

a. Trade Date. With respect to any USDETH Deci Future, the date on which the 

Exchange, in its sole discretion accepts a buy or sell order, as the case may be. 

b. Effective Date. With respect to any USDETH Deci Future, the Trade Date 

applicable thereto. 

c. Minimum Price Fluctuation. With respect to any USDETH Deci Future, $0.01.

d. Initial Payment Date. With respect to any USDETH Deci Future, date on which the 

buyer of a USDETH Deci Future will pay the Purchase Price shall be the Trade 

Date applicable thereto. 

e. Purchase Price. With respect to any USDETH Deci Future, the total U.S. Dollar 

denominated amount that a Buyer agreed to pay for a USDETH Deci Future is the 

Purchase Price.

f. Last Trading Day/Time. Up to but not including 5:00 pm New York time (adjusted 

for daylight savings) on the Friday of the week and month of expiry for that 

contract, or as otherwise determined by the Exchange in its sole discretion. 

g. Final Payment Day/Time. 5:00 pm New York time (adjusted for daylight savings) 

on the Friday of the week and month of expiry for that contract. 

h. Settlement. Physical delivery on the Final Payment Day/Time.

K. Block Trading. Each Block Trade of as USDETH Deci Future must be effectuated in 

accordance with Rule 5.7. The minimum block size for the USDETH Deci Future is equal 

to 10 contracts. All parties to a USDETH Deci Future Block Trade must be Eligible 

Contract Participants.
Ledger Holdings Inc

Exhibit C

LedgerX has determined that the Company Contract certified herein relate to the following DCM 

Core Principles: 

Core Principle 2 – Compliance with Rules 

Trading in the Company Contract will be subject to the LedgerX Rulebook (the “Rules”), which 

prohibits abusive trading practices, including, but not limited to, the following: fraudulent trading 

(Rule 8.3.C); spoofing or any other conduct that constitutes a disruptive trading practice or is 

otherwise prohibited under CEA Section 4c(a)(5) or applicable CFTC Regulations (Rules 8.3.J, 

8.3.N and 8.9); any manipulation proscribed under CEA Section 9(a)(2) or CFTC Regulations 

180.1(a) or 180.2 (Rules 8.3.K and 8.9); making fictitious bids or offers (Rules 8.3.M and 8.9); or 

any other activity that tends to impair the welfare, reputation, integrity or good name of LedgerX 

(Rule 8.5). 

As with all contracts listed for trading on LedgerX’s DCM, trading activity in the Company 

Contract will be subject to monitoring and surveillance by LedgerX’s Compliance Department. 

LedgerX has the authority to exercise its investigatory and enforcement power where potential 

Rule violations are identified. See Chapter 9 of the Rules.

Core Principle 3 – Contracts Not Readily Susceptible to Manipulation 

The Company Contract is not readily susceptible to manipulation because it is fully-collateralized

and results in physical delivery. LedgerX’s fully-collateralized model limits the ability of 

Participants to manipulate the market through corners and squeezes. Under a partiallycollateralized model, a Participant might be unable to source a sufficient quantity of the underlying 

to satisfy its delivery obligations because the market had been cornered. This approach would not 

enable manipulation of the Company Contract because each position is fully collateralized at the 

time of execution. For example, a Participant selling a Company Contract would not need to cover 

the position by purchasing more ETH because the Participant will have already posted the ETH 

underlying the contract with LedgerX pursuant to the fully-collateralized model. As a result, the 

Participant will not experience a squeeze and an attempt to squeeze the LedgerX market likely 

would be unsuccessful. 

Core Principle 4 – Prevention of Market Disruption

Rule 8.9 prohibits traders from attempting to manipulate, or manipulating the market, in any 

contract listed on LedgerX’s DCM, including any manipulation or attempted manipulation of the 

contract’s underlying. This prohibition would include manipulation and attempted manipulation 

of the Company Contract and the underlying for the Company Contract. This Rule is enforced by 

LedgerX in accordance with Chapter 9 of the Rules. 
Ledger Holdings Inc

Core Principle 5 – Position Limits or Accountability 

Rules 8.15 and 8.16 allow LedgerX to adopt position limits or position accountability levels for 

contracts listed on LedgerX’s DCM. LedgerX has elected to set position limits as described above 

in Exhibit B in order to (i) add a further layer of protection for market participants by mitigating 

the risk of market manipulation and (ii) prevent excess speculation in the Underlying. 

Core Principle 6 – Emergency Authority 

Pursuant to Rule 2.12, LedgerX may take necessary or appropriate actions in response to an 

emergency affecting trading or open positions in the Company Contract, including the following: 

(i) suspend or curtail trading in, or limit trading to liquidation, for the Company Contract; (ii) 

extend or shorten the last trading date for the Company Contract; (iii) provide alternative 

settlement mechanisms for the Company Contract (including by altering the settlement terms or 

conditions or fixing the settlement price) or suspend the transfer of the underlying; (iv) order the 

transfer or liquidation of open positions in the Company Contract under certain circumstances; (v) 

extend, shorten or change the trading hours or the expiration date of the Company Contract; (vi) 

require participants to meet special margin requirements; (vii) order the transfer of positions in the 

Company Contract and the associated margin or alter the Company Contract’s settlement terms or 

conditions; or (viii) impose or modify position limits, price limits, and intraday market restrictions. 

LedgerX has also added new Rule 11.142 (Digital Currency Fork Policy) to add an additional layer 

of protection, in anticipation of digital currency specific circumstances that may require LedgerX 

to exercise emergency authority.

Core Principle 7 – Availability of General Information 

In accordance with Rule 2.17, LedgerX will publish daily information on the Company Contract 

regarding settlement prices, volume, open interest, and opening and closing ranges. 

Core Principle 11 – Financial Integrity of Transactions 

Rule 6.1.A describes the process by which LedgerX verifies sufficient funds and/or collateral prior 

to accepting an order in any contract, including an order in the Company Contract. Specifically, 

upon submission of an order, LedgerX will conduct a review of the relevant participant’s collateral 

account to ensure that the participant can fully collateralize the order prior to entering into the 

Company Contract. If the relevant participant’s collateral account does not have the necessary 

funds and/or collateral for the order, LedgerX will not accept the order. Once orders in the 

Company Contract have been successfully matched, LedgerX’s derivatives clearing organization 

will immediately clear the Company Contract in accordance with Rule 6.1.B. 

2 See March 2021 Rule Amendments, new Rule 11.14.
Ledger Holdings Inc

Exhibit D

DELIVERABLE SUPPLY ANALYSIS

Pursuant to Regulation 38.252, LedgerX monitors the supply of ETH underlying the USDETH 

Deci futures contract and its adequacy to satisfy the delivery requirements so that LedgerX may 

make good faith efforts to resolve conditions that threaten the adequacy of supplies or the delivery 

process.

The commodity underlying the USDETH Deci futures contract (namely ETH) is a decentralized 

digital currency. The supply of ETH is publicly available on the ETH blockchain, and currently 

stands in excess of 114 million ETH. The total number of ETH, however, does not equal the total 

deliverable supply, since to accidental loss and willful destruction may effectively remove some 

ETH from circulation temporarily or permanently.

Total Supply of ETH

The Ethereum network also increases the total supply over time by issuing new ETH as blocks are 

added to the blockchain. This process of issuing new ETH incentivizes miners to process and 

validate those blocks. Currently, the network provides 2 ETH per new block in mining rewards. 

The network also rewards miners whose found blocks do not make it into the blockchain (“uncle 

blocks”) with up to 1.75 ETH per uncle block.3 This is necessary because Ethereum has low block 

confirmation times, so it is more likely that multiple blocks will be found around the same time. 

If Ethereum did not have an uncle block reward, it would be less attractive for miners to secure 

the network, as they would “win” the block rewards more rarely. Over the past year, the total 

supply of ETH has increased as follows:4

2020

Jan Feb Mar Apr May Jun

Total ETH 109,511,661 109,907,159 110,330,033 110,752,856 111,161,261 111,556,089

2020

July Aug Sept Oct Nov Dec

Total ETH 111,9787,163 112,400,518 112,820,993 113,225,824 113,645,918 114,065,028

2021

Jan

Total ETH 114,484,369

3 ETH monetary policy may undergo changes as a result of off-chain governance. These monetary policy changes 

are generally expected to relate to the rate of issuance of new ETH, or the nature of payment of transaction fees.

4 Source: https://etherscan.io/chart/ethersupplygrowth. 
Ledger Holdings Inc

Blockchain Transfers of ETH

In addition to the expanding supply of ETH, substantial numbers of ETH are regularly transferred 

among wallets on the blockchain. The following chart reflects the total number of ETH transfers 

recorded on the blockchain: 5

Month 2018 2019 2020 2021

January 33,504,270 16,569,597 17,703,536 37,490,761

February 22,231,978 13,413,899 19,212,778

March 20,261,862 18,029,582 22,748,700

April 20,876,642 19,830,158 23,211,389

May 25,105,717 24,332,475 26,6485,87

June 22,471,788 25,679,653 28,802,843

July 19,937,033 22,892,039 33,896,953

August 19,842,059 22,003,889 36,679,836

September 16,056,742 20,465,806 32,848,877

October 17,056,926 20,954,629 33,297,049

November 16,713,911 20,388,573 33,785,905

December 17,107,601 18,271,815 35,930,517

Yearly Total: 251,166,529 242,832,115 318,118,383

Major Spot Exchange Trades of ETH for U.S. Dollars

The volume of ETH transacted on spot exchanges is also extensive. The following chart reflects 

the total number of ETH traded for U.S. dollars each month on major spot exchanges:6

Month 2018 2019 2020 2021

January 19,727,609 19,150,973 7,829,149 45,329,356

February 14,813,754 17,414,591 14,305,798

March 12,907,881 10,545,202 27,446,677

April 13,840,051 17,381,625 16,497,060

May 13,813,195 23,443,609 12,889,006

June 10,376,771 15,474,969 9,485,508

July 7,215,427 12,981,963 11,066,344

August 11,484,458 7,371,810 15,387,261

September 23,281,832 8,968,387 15,703,915

October 10,062,781 7,768,303 8,764,006

November 23,792,955 5,781,297 18,217,716

December 32,049,358 4,951,217 17,903,988

Yearly Total: 193,366,072 151,233,946 175,496,428

5 Source: https://etherscan.io/chart/tx. 6 Source: https://coinmetrics.io (measuring ETH-USD volumes across BinanceUS, Bitfinex, Bitstamp, Bittrex, 

Cex.io, Coinbase, FTX, Gatecoin, Gemini, Itbit, Kraken, and Liquid).
Ledger Holdings Inc

Sufficiency of Deliverable Supply

Based on the above information, LedgerX recommends an initial position limit of 1,000,000 

contracts, which is the equivalent of 100,000 ETH (each LedgerX Company Contract is the 

equivalent of 1/10th ETH). This amounts to 0.087% of the total outstanding ETH as of January 

2021. It further amounts to 0.266% of the total number of ETH transferred on the blockchain in 

the same month. Moreover, it equals 0.221% of the total ETH transacted for U.S. dollars on major 

spot exchanges in January of 2021, as detailed above. 

LedgerX further ensures that there is sufficient deliverable supply of ETH to satisfy LedgerX’s 

Company Contracts by requiring full collateralization of any position requiring performance at the 

time of execution. Thus, when the seller of a USDETH Deci call option enters into the position, 

the ETH must already be in the possession of the seller to ensure delivery at expiry if the contract 

is exercised.

Based on the foregoing, LedgerX concludes that there is sufficient deliverable supply of ETH for 

the performance of LedgerX Company Contracts, as explained above.