By
Chimamanda U. Martha
April 25th, 2024
It seems that we’ll have to wait some more for Bakkt to get its Bitcoin futures contract approved. A new report claims that the CFTC’s decision-making process has been progressing slow and now it is likely to go live only in February 2019.
Looking at CFTC’s current pace, the futures contract wouldn’t be launched at the desired time.
That still doesn’t mean that the CFTC won’t ultimately approve the plan. A person familiar with the agency’s inner workings said even a Jan. 30 launch was still plausible, meaning the delay could be just a matter of days. What is known is that the comment period goes on for 30 days after which the commissioners will most likely take a few days to go through the comments and then vote on the same.
However, the delay may move the launch to February as the 30 days public comment period will most likely start on 26th December because of the Christmas holidays on 24th and 25th December. After a month’s time, i.e. most likely on 26th January, the commissioners shall start to read the public comments which shall further take a few days before they actually come up with a decision.
Specifically, the CFTC must grant an exemption for Bakkt’s plan to custody Bitcoin on behalf of its clients in its own “warehouse,” according to sources familiar with regulatory discussions of the plan. CFTC regulations normally require that customer funds be held by a bank, trust company or futures commission merchant (FCM).
The exchange said they will announce the new launch date, but not until next week.
Many speculators suggest that Bakkt Bitcoin futures approval would begin a bull rally for cryptocurrencies in the market.
Alex Kruger, the crypto analyst indicated:
”Possible outlook for BTC: First, the bull run on BAAKT & renewed ETF approval narrative early 2019. Second, ETF denied Feb/27, massive crash, goodbye 6k, hello 4k, cleanse all weak hands Lastly, having 2020 narrative and re-adjustments lead to a sustained bull run for the rest of 2019 & 2020.”
Yesterday we wrote of how Bitcoin Daily Futures contract is reportedly getting a green signal from the authorities which have been a much-awaited Bitcoin Futures that is being launched by New York Stock Exchange [NYSE]’s sister company Bakkt, as per Wall Street Journal.
The Bitcoin Futures contract launched Intercontinental Exchange [ICE] is basically for the institutional players that haven’t been able to get into the cryptocurrency-frenzy. Now that Bakkt is getting approval from the authorities the futures contract will see a massive adoption from institutions due to Bitcoin’s inherent demand.
Recent research and reporting indicate that crypto futures contracts are particularly susceptible to manipulation, especially in the form of ‘banging the close,’ or intentionally reckless behavior which disrupts the market to the advantage of the trader.
While the fact that crypto futures are particularly vulnerable to manipulative activity might be an obstacle for Bakkt’s launch, presumably regulated platforms and contracts like Bakkt are a crucial step towards the maturation and stabilization of the market.
This project will, however, receive an exemption from the Commodity Futures Trading Commission to hold Bitcoin on behalf of investors as current regulations only make provisions for fiat currency, securities, and agricultural commodities.
How Bakkt Could Affect the Bitcoin Price
The physical delivery of Bitcoin guaranteed by the Bakkt Bitcoin futures market will provide investors with crypto asset custody and deliver the asset to every investor in the market. Depending on the demand for the asset and the trading activity on Bakkt’s exchange, the scheduled launch of Bakkt in January could affect the supply of the dominant cryptocurrency and lead to an increase in the Bitcoin price.
Jake Chervinsky, a government enforcement defense and securities litigation attorney at Kobre & Kim, said:
“Also noteworthy is the fact that Bakkt will custody and deliver real bitcoin. That means institutional inflows would reduce supply and thus (maybe) increase price too. This is different from other regulated futures markets like CME and CBOE, which only deal in cash-settled futures.”
https://twitter.com/jchervinsky/status/1059828623471972354?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1059828623471972354&ref_url=https%3A%2F%2Fwww.ccn.com%2Fhow-bakkt-could-affect-the-bitcoin-price-unlike-existing-futures-markets%2F
The effort of ICE has received backing from major corporations such as Microsoft Corp. and Starbucks Corp., which have the longer-term goal of making cryptocurrency transparent and regulated enough to allow customers to use it for retail purchases, such as a Starbucks latte.
Bitcoin Futures have been a really important component of cryptocurrency trading as they allow investors to bet on the price of the cryptocurrency. If that gets approved Bakkt will definitely add to a lot of liquidity to the existing volumes.
Bakkt is not ICE’s first foray into cryptocurrencies. The exchange giant has an investment in Coinbase, a San Francisco-based provider of “wallet” services that is one of the leading cryptocurrency businesses. In January, ICE also announced it was teaming up with startup Blockstream to start a service that would bring Bitcoin data to hedge funds and other professional trading firms.
Nasdaq Inc is also planning to launch Bitcoin futures at the beginning of 2019, according to a report. The U.S. based stock exchange revealed plans to offer Bitcoin futures to users last year. The exchange plans to start trading futures in the first quarter of 2019. Nasdaq has also been working to get the futures approved from Commodity Futures Trading Commission [CFTC].
Bitcoin futures was first introduced by Cboe [Chicago Board Options Exchange], the Chicago based stock exchange, in December 2017. Later the CME [Chicago Mercantile Exchange] group launched its own version of Bitcoin futures contracts. Bitcoin futures on CME is based off four markets while its just one at Cboe.
The launch of Bakkt Bitcoin Futures will give the CBOE Bitcoin ETF a strong platform. This is because the ETF is tied to the Bitcoin futures movements and liquidity. Krüger says that the arrival of Bakkt futures contracts by the end of 2018 will play a big role.
First that it will bring a renewed optimism among Bitcoin investors which can lead to a huge price pullback. Second is that the ETF arrival in March will carry forward this optimism that will help to continue with the price rally ahead.