Legal, regulated bitcoin options trading will soon be a reality after the U.S. Commodity Futures Trading Commission issued an order granting LedgerX LLC registration as a derivatives clearing organization under the Commodity Exchange Act.

Founded in 2013, LedgerX already offers a range of services akin to a bitcoin exchange, but the new regulatory approval means that it’s expanding its offering to include bitcoin options trading. Options are a derivative security that is a contract granting the holder of the option the right but not the obligation to buy or sell an underlying asset at a set price on or before a certain date.

With bitcoin, an option could be the right to acquire or sell, say, 100 bitcoin at $3,000 on or before a certain date, allowing those in the bitcoin community to hedge their  investments. Options are most commonly used by investors or holders of a product to hedge against price swings, providing protection against market volatility. That’s something the bitcoin market is famous for.

“Our recently granted licenses give LedgerX an enormous regulatory advantage for serving our institutional customers,” LedgerX Chief Executive Officer Paul Chou said in a blog post Monday. “LedgerX offers our customers a one-stop shop for tools to buy and sell spot bitcoin, derivatives, and all manner of specialized cryptocurrency swaps. This combined offering makes it absolutely seamless for our customers to gain directional exposure, volatility tools, and hedging abilities, all under US federal supervision.”

The news that a securities product that dealt with bitcoin as an underlying asset has gained regulatory approval is welcome news to the industry, but the ruling doesn’t necessarily set a precedent for other bitcoin-related products seeking approval. “This authorization to provide clearing services for fully-collateralized digital currency swaps does not constitute or imply a Commission endorsement of the use of digital currency generally, or bitcoin specifically,” the CTFC noted in its statement.

The best-known application for a bitcoin-related product is the Bitcoin Trust ETF owned by the Winklevoss twins of Facebook fame. Their application, first lodged way back in 2015, was at rejected by the Securities and Exchange Commission in March before the SEC partially changed its mind and agreed to review its rejection in April. That review remains ongoing.

The reason the SEC has always cited in rejecting applications for bitcoin-related securities is that the market for bitcoin is unregulated. The SEC and CTFC are different government organizations, but given that the CTFC does not appear to have an issue with the fact that bitcoin markets are unregulated, it’s possible that the SEC could change its mind in the future.

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