Both the Bitcoin ETF and the Bitcoin futures of the Bakkt exchange are two of the biggest hopes of the crypto market, which are intended to provide capital growth. Above all, the repeatedly postponed decision to approve a Bitcoin ETF has already given the cryptographic market several difficult hours. After a long wait and struggle, Bakkt has now obtained regulatory approval for the launch of Bitcoin futures.
The owner of the New York Stock Exchange, the Intercontinental Exchange (ICE), is the parent company of Bakkt. The company, as well as many Bitcoin investors, has been awaiting regulatory approval for the launch of Bitcoin futures since last December. The exchange has announced that the BTC futures are due to start this year on 23.09.2019.
Bakkt’s Bitcoin futures will be settled through ICE US, which is regulated by the U.S. Commodities Futures Trading Commission (CFTC). The company has also received approval from Bakkt Trust Company LLC of the New York Department of Finance Services, which was the final hurdle on the road to approval. Bakkt Trust enables the exchange to act as a qualified custodian, which is an integral part of the company. This enables Bakkt to enter into contracts in the form of Bitcoin “physically”.
“Our contracts have already received the “green light” from the Commodity Futures Trading Commission (CFTC) through the self-certification process, and user acceptance testing has started. With approval by the New York State Department of Financial Services (NYSDFS) to create the Bakkt Trust Company, the Bakkt Warehouse will custody Bitcoin for physically delivered futures” Bakkt CEO Kelly Loeffler announced in a Medium post last Friday.
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The Bakkt Warehouse, which is part of the Bakkt Trust Company, will be built using cyber and physical security arrangements that support the world’s most active markets, including the NYSE. Besides, the independent governance and compliance obligations of a qualified custodian mean that the Bakkt Warehouse is aimed to meet the highest standards of financial supervision.
Bakkt was planning to launch the Bitcoin futures in December last year but has been reluctant to start the product to this day. The company has worked hard in recent months to build a trusted institutional ecosystem to enable trading in Bitcoin and futures:
What is unique is that Bakkt Bitcoin futures contracts are not dependent on unregulated spot markets for settlement prices and thus serve as a transparent pricing mechanism for Bitcoin’s benchmark price. The importance of this distinguishing feature is only reinforced by reports of significant manipulative spot market activity and other concerns such as inconsistent anti-money laundering policies and weak compliance controls.
Providing a trusted ecosystem is the primary goal of Bakkt. To this end, the company set a higher standard, including an institutional compliance and anti-money laundering program, settlement prices that differ from unregulated spot prices, comprehensive market monitoring, a guarantee fund contribution and insurance. The relevant trading and risk management tools that make all this possible have been in use for centuries.
The rollout of the Bitcoin Futures is part of a larger action plan to be completed next month. The company has further announced that it will use cloud solutions from Microsoft to enable consumers to buy, securely store and sell digital assets. Bakkt is also working with Starbucks to allow customers to spend Bitcoin and other cryptocurrencies in cafes and retail outlets. This rollout is scheduled to begin in the summer of 2020. Nevertheless, Bakkt has not issued an official statement for this area of the partnership since last year, so it remains to be seen to what extent speculation will prove.
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