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UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

_______________________________________ 

In the Matter of the Application of 

LedgerX, LLC 

For Registration as a Derivatives Clearing Organization 

_______________________________________ 

AMENDED ORDER OF REGISTRATION 

On July 24, 2017, the Commodity Futures Trading Commission (the “Commission”) 

issued an order (“Original Order”) pursuant to Section 5b of the Commodity Exchange Act (the 

“Act”), 7 U.S.C. § 7a-1, granting LedgerX LLC (“LedgerX”) registration as a derivatives 

clearing organization (“DCO”) for the clearing of “fully collateralized digital currency swaps.” 

On January 22, 2020, LedgerX requested that the Commission amend the product scope 

of the Original Order to permit LedgerX to also clear futures and options on futures. On June 23, 

2020, LedgerX amended its request to additionally ask the Commission to remove the “digital 

currency” limitation in the product scope. The Commission has reviewed the request, along with 

supporting information, and finds that the requested amendment is consistent with the 

requirements of the Act and applicable regulations thereunder, but has identified additional terms 

and conditions necessary to ensure LedgerX’s compliance with the Act and applicable Part 39 

regulations. 

In light of the foregoing, IT IS ORDERED, pursuant to Section 5b of the Act, 

7 U.S.C. § 7a-1, that the Original Order is superseded and LedgerX is granted registration as a 

DCO, subject to the terms and conditions specified herein: 

(1) Cleared Products. LedgerX is permitted to clear, in its capacity as a DCO, fully 

collateralized futures, options on futures, and swaps. A contract cleared by LedgerX will be 

considered fully collateralized if LedgerX holds, at all times, funds sufficient to cover the 
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maximum possible loss a counterparty could incur upon liquidation or expiration of the contract, 

in the form of the required payment. 

(2) Treatment of Funds. Funds held in the Proprietary Accounts (as this term is 

defined in 17 C.F.R. § 1.3) shall be considered member property, as that term is defined in the 

Bankruptcy Code. LedgerX shall at all times maintain funds of its clearing members separate 

and distinct from its own funds. 

(3) Restriction on FCM Participants. This order does not permit any FCM participant 

to clear on behalf of any customer at LedgerX. Prior to permitting any FCM participant to clear 

on behalf of any customer, LedgerX shall submit all rules applicable to customer clearing to the 

Commission pursuant to Commission Regulation 40.5 or 40.6. 

(4) Insurance. LedgerX shall obtain and endeavor to maintain to the extent 

commercially reasonable insurance coverage for theft or loss of participant digital asset 

collateral. 

(5) Risk Disclosure. LedgerX shall fully disclose to any potential clearing member, 

in plain language, material risks associated with the clearing of fully collateralized digital asset 

contracts, including, without limitation, the theft, loss, or hacking of the underlying digital asset. 

The disclosure may include a discussion of any mitigating insurance or similar policies so long 

as the scope and limitations of any policy are clearly explained. 

(6) Digital Asset Audit. LedgerX shall engage an independent certified public 

accountant to audit LedgerX’s digital asset balances and issue an opinion on the accounting 

treatment of digital assets held by LedgerX on an annual basis. 

(7) Digital Asset Third-Party Service Providers. LedgerX shall obtain and provide to 

the Division, as available to LedgerX, a copy of any SOC 1 – Type I or Type II audit report of 
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any third-party service provider used in the custody or storage of any digital assets held on behalf 

of clearing members. 

(8) Compliance with Certain Statutes. LedgerX shall comply with the Bank Secrecy 

Act (31 U.S.C. § 5311 et seq.), the International Emergency Economic Powers Act (50 U.S.C. 

§ 1701 et seq.), the Trading with the Enemy Act (50 U.S.C. § 4301 et seq.), and the executive 

orders and regulations issued pursuant thereto, including the regulations issued by the U.S. 

Department of the Treasury and, as applicable, the Commission, as if LedgerX were a covered 

“financial institution” within the meaning of 31 C.F.R. § 1010 et seq. 

(9) Compliance with the Act and Commission Regulations. LedgerX shall comply, 

and shall demonstrate compliance as requested by the Commission, with applicable provisions of 

the Act, including the core principles set forth in Section 5b of the Act (“Core Principles”), and 

Commission regulations, as may be amended or adopted from time to time. LedgerX shall fulfill 

each of the representations it has made to the Commission relating to compliance with the Core 

Principles and Commission regulations. 

(10) Self-Regulatory Function. LedgerX shall ensure the performance of all selfregulatory functions required of it as a registered DCO under the Act and Commission 

regulations, including, without limitation: monitoring and enforcing clearing member 

compliance with LedgerX admission and continuing eligibility standards; and enforcing clearing 

member compliance with the terms of all other LedgerX rules, regulations, and procedures. 

(11) New Regulations. Should the Commission promulgate or amend a regulation 

addressing or otherwise affecting any aspect of this order, then such regulation will apply and 

supersede the applicable term(s) in this order.