The wait is over: Bakkt’s bitcoin futures are being launched next month.
The cryptoeconomy has been captivated with all things Bakkt ever since Intercontinental Exchange (ICE), the owner-operators of the NYSE and other major financial markets, announced back in August 2018 that it was launching the cryptocurrency exchange and physically-settled bitcoin futures products.
In the past year, Bakkt’s repeatedly pushed those plans back in order to get things right and not rush its rollout. But the final stretch is in, company chief executive officer Kelly Loeffler revealed in an August 16th blog post. Therein, Loeffler confirmed the firm has achieved the needed steps to launch its bitcoin futures on September 23rd.
The announcement comes on the same day that the New York State Department of Financial Services (NYDFS) — separately infamous in the cryptoeconomy for creating the BitLicense — granted Bakkt a banking charter to operate the Bakkt Trust Company in the state.
That trust company will serve as the qualified custodian for the Bakkt Warehouse, where Bakkt will safely store the bitcoin that underpin its physically-delivered futures products. There will be two such contracts to start, one of which will track the bitcoin price monthly and the other daily. The futures themselves will be traded on the ICE Futures US platform and settled on ICE Clear US.
“This offers customers unprecedented regulatory clarity and security alongside a regulated, globally accessible exchange in a market underserved by institutional-grade infrastructure,” Loeffler said on Friday.
Recent developments indicated it was only a matter of time until Bakkt launched. The firm started user acceptance testing back in July. And ICE’s leadership noted even more recently that Bakkt was on the verge of being a-go.
“Subject to final regulatory approvals, we plan to launch our physically settled bitcoin futures in the very near future,” ICE CEO Jeffrey Sprecher had said during an August 1st earnings call.
Getting the CFTC Onboard
Back in the spring, reports swirled that the U.S. Commodity Futures Trading Commission (CFTC) had qualms over how Bakkt was planning to custody bitcoin for its futures products. The Commission allegedly wanted Bakkt to optimize its custody plans further.
In the time since then, it appears Bakkt did just that. The CFTC hasn’t pressed the issue and later accepted Bakkt’s self-certification process.
But the CFTC certainly won’t hesitate to apply pressure if it feels it needs to. Consider the recent case of LedgerX. The company’s leadership announced it rolled out a physically-delivered bitcoin futures product to U.S. users on July 31st.
However, that didn’t end up being the case. Over the span of the next day, the CFTC told LedgerX to censor its tweets associated with that botched launch because the firm “has not yet been approved by the Commission,” CFTC chief communications officer Michael Short later noted to CoinDesk.
Things got tenser from there, as LedgerX CEO Paul Chou floated the idea of suing the Commission for “breach of duty,” among other things. The company’s press representative at the time also resigned.
If LedgerX had successfully brought its physically-delivered bitcoin futures to market on July 31st, it would’ve beat Bakkt and other companies like ErisX to the punch.
Bullish for Bitcoin?
We’ve seen bitcoin futures before from CME Group and Cboe, but these have been cash-settled products. Bakkt’s physically-settled bitcoin futures could be a game changer for demand around bitcoin, as BTC will need to be purchased and sent to the owner upon a contract’s completion.
As these contracts will be taking place daily and monthly, buy pressure around bitcoin could see a boon on September 23rd and beyond.
And with LedgerX and ErisX seemingly not far behind, things are set to get more and more institutional around the OG cryptocurrency in the months ahead.
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