Bakkt, an Atlanta-based subsidiary of the Intercontinental Exchange (ICE), an American firm that owns the New York Stock Exchange, will begin user acceptance testing for its Bitcoin futures contracts on July 22, 2019.
As mentioned in a blog post published by Adam White, the Chief Operating Officer at Bakkt, the company’s Bitcoin futures will be listed and traded on ICE Futures U.S. and cleared at ICE Clear U.S.
White, the Former Vice President at Coinbase, noted that institutional investors have not been participating in the digital asset space as active as other financial markets. He believes that crypto market infrastructure must be improved and clear regulatory guidelines should be established in order to attract institutional clients.
White explained that crypto markets have relatively lower trading volumes and insufficient liquidity, and lack price transparency due to regulatory uncertainty and limited availability of proper trading tools for professional investors.
Bakkt’s management intends to provide compliant financial products by offering regulated custody as part of their daily and monthly margined Bitcoin futures contracts. The company is also planning to build trusted infrastructure for its open, seamless, global network, which will be used to securely buy, sell, and trade digital assets.
One of Bakkt’s most highly anticipated product offerings is physically settled daily futures contracts for Bitcoin. The firm is planning to provide these contracts to investors in over 30 different countries.
In December 2017, the CME Group and Cboe began issuing cash-settled Bitcoin futures contracts. Companies like Bakkt and LedgerX could potentially allow more bitcoin to enter institutional markets by offering physically settled BTC futures.
Crypto traders will be required to pass know-your-customer (KYC) and anti-money laundering (AML) checks before being allowed to acquire Bitcoin futures contracts. Currently, Bakkt’s management is waiting for regulatory clearance from the Commodity Futures Trading Commission (CFTC) before launching its crypto futures products.
According to Bakkt’s official website, the firm’s financial products were developed after obtaining feedback from various stakeholders. Bakkt’s management notes that its BTC futures allow institutions to gain exposure to cryptoassets in a highly secure and compliant manner.
The company’s trading desk is planning to list a daily settlement Bitcoin futures contract, which allows traders to perform transactions in a “same-day market.” Bakkt will also list monthly Bitcoin futures in order to enable trading in the “front month and across the forward pricing curve.”
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