Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Pending the regulatory approval from CFTC, the physically-settled Bitcoin futures on Bakkt is expected to go live on 12th of December.
According to an official document released on October 22, Intercontinental Exchange (ICE) will likely launch Bitcoin futures on its Bakkt platform by December 2018. ICE – the parent company of New York Stock Exchange (NYSE) – announced about the Bakkt crypto trading platform this year in August 2018.
In addition to crypto trading, the Bakkt platform aims to make crypto spending in daily lives. ICE believes that it would actually trigger the mainstream adoption of cryptocurrencies. For this, ICE has collaborated with a number of tech and retail giants like Microsoft and Starbucks. The Bakkt crypto trading platform is expected to go live by next month of November.
The Bakkt Bitcoin Futures to Launch on December 12th
ICE announced that pending regulatory approval, it will list Bitcoin futures by the 12th of December. ICE is currently working with the Commodity Futures Trading Commission (CFTC) over the regulatory aspects.
“Each futures contract calls for delivery of one bitcoin held in the Bakkt Digital Asset Warehouse and will trade in U.S. dollars and others. One daily contract will be listed for trading each Exchange Business Day,” reads the official announcement.
Note that Bakkt operates as a “regulated ecosystem” there providing a platform for institutional investors to participate in the crypto market.
Bakkt CEO Kelly Loeffler has previously talked about introducing physically-settled Bitcoin futures contract backed by actual Bitcoin tokens on the Bakkt platform. At that time, Bakkt said that its physical Bitcoin Futures can be traded against the U.S. Dollar, Euro, and British pound sterling. Bakkt has also promised to offer one-day Bitcoin Futures contracts. It means that clients can cash their futures product in Bitcoin, instead of cash.
For each purchase of USD/BTC futures contract, there will be a physical delivery of one Bitcoin in the client’s account at the time of settlement. This is different from the cash-settled Bitcoin Futures contract by CME and CBOE which means that no actual crypto assets exchange hands at the time of expiry.
However, Bakkt received some criticism which stated that its contracts could mask “hidden leverage”. Responding to it, Bakkt said:
“A critical element to price discovery is physical delivery. Specifically, with our solution, the buying and selling of bitcoin is fully collateralized or pre-funded. As such, our new daily bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset.”
Bakkt Bitcoin Futures Can Make Way for Bitcoin ETF.
Many experts believe that the launch of the Bakkt platform will encourage more institutional players to participate in the crypto market while increasing the probability of the arrival of Bitcoin investment products like the Bitcoin ETF.