After a year of getting their ducks in a row, the Intercontinental Exchange’s young subsidiary Bakkt is preparing itself for the launch of their physically delivered Bitcoin futures, which will begin trading on September 23.
Bakkt has now announced that their clients will be able to start depositing funds into the Bakkt Warehouse, the qualified custodian for the cryptocurrency trading platform. The Warehouse doors will open a few weeks before trading begins, on September 6.
There is much excitement about Bakkt’s offering in the Bitcoin futures trading space as they have meticulously worked to ensure a fully regulated and controlled environment. This level of regulation, coupled with the traditional product of futures contracts, is an enticing prospect for traditional investors and traders.
Part of their end-to-end regulated offering is the Bakkt Warehouse which, as you’d expect is a: “a regulated and secure qualified custodian for Bitcoin, to support our futures contracts.” explained the announcement.
What else makes the Bakkt Futures offering so attractive is that they, uniquely, will not rely upon unregulated spot markets for settlement prices.
This is what is meant by ‘physically-delivered Bitcoin futures.’ It means that the customers will receive actual cryptocurrency instead of cash payments – which is what happens at CME and CBOE – once their contract expires. These Bitcoin funds then come from the fully regulated Bakkt Warehouse.
More so, with a touch of additional regulation, Bakkt’s Bitcoin futures will be exchange-traded on ICE Futures U.S. and cleared on ICE Clear U.S., which are federally regulated by the CFTC.
Essentially, any fears about regulatory interference or concerns about the ‘Wild West’ side of things in the cryptocurrency space have all been addressed by Bakkt in this attempt to bring a professional-looking product to the market.
Of course, getting this right and putting on a good offering will have its advantages for the company as well. The Bitcoin futures market came to be when the price of Bitcoin as at its highest in late 2017, and since then, there has been a lot of money and trading volume involved.
A recent report from Forbes has shown that CME Bitcoin futures saw an average daily volume of $515 million in May 2019; that, on average, is more than 13,600 contracts a day. No doubt that Bakkt will be hoping that they can take a slice of this market, if not a couple of slices with their fully-regulated, physically-delivered Bitcoin futures contract.