The launch of ICE’s Bakkt is expected to change the flow of capital coming from institution towards crypto. Also, a lot of analyst on the street are linking the approval of Bitcoin ETF is linked to Bakkt’s launch. This makes Bakkt’s launch a really important event for cryptocurrencies and according to the recent news flow, Bakkt’s first of its kind Bitcoin future is at the doorstep of getting approved.
Bakkt’s first future contract pays out entirely in cryptocurrency.
According to the recent report published by Wall Street Journal, Bakkt’s first-of-its-kind Bitcoin futures contract looks poised for approval. The futures contract platform, which will be the first futures contract that would pay out entirely in cryptocurrency, rather than settling in fiat, is currently under review by the CFTC and it is expected to be launched sometime in early 2019.
The report further states that “CFTC staff is currently reviewing ICE’s business plan. CFTC commissioners will likely vote on whether to approve the project early in 2019, after which the public will have 30 days to weigh in.”
The contract, launched by New York Stock Exchange owner Intercontinental Exchange Inc., is aimed at institutional players who have stayed out of cryptocurrency markets out of concerns that they are unregulated and susceptible to manipulation.
“Once digital assets have more trust and regulation, people will be more comfortable using digital assets as currency,” said Kelly Loeffler, chief executive of the ICE cryptocurrency business, dubbed Bakkt
The way, Wall Street Journal has reported the news it looks like regulators are getting closer to giving Intercontinental Exchange, the parent company which also notably runs the New York Stock Exchange, the green light. Currently, Bakkt’s competitors in the US include contracts issued by CME and CBOE, but Bakkt clear unique selling proposition is that it is entirely crypto-based, rather than a contract which settles in Fiat USD based on the performance of the underlying cryptocurrency prices.
“It’s great to have cash-settled, but there’s a need for physical delivery” of bitcoin, Ms. Loeffler said.
Bakkt’s official Twitter account announced the said news.
— Bakkt (@Bakkt) December 20, 2018
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.
Will Bakkt change the course of institutional monies to cryptos? Do let us know your views on the same.
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Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.