Bitcoin Futures to Arrive On ICE’s Bakkt Platform in December 2018
On Monday, October 22, Intercontinental Exchange (ICE) - the parent company of the New York Stock Exchange (NYSE) - released a document showing that the much awaited Bitcoin Futures contract will arrive on the Bakkt platform on 12th of December 2018.
Note that these are the physically settled Bitcoin futures contracts, backed by actual Bitcoin tokens. The documents mentions that the Bakkt platform will hold these Bitcoins in the ICE Digital Asset Warehouse, once it get a regulatory approval from the Commodity Futures Trading Commission (CFTC).
The physically settled Bitcoin futures contract on Bakkt will be cleared by ICE subsidiary - ICE Clear U.S. The press release notes: “Each futures contract calls for delivery of one bitcoin held in the Bakkt Digital Asset Warehouse and will trade in U.S. dollars and others. One daily contract will be listed for trading each Exchange Business Day.”
ICE announced the launch of Bakkt platform in August 2018. However, the platform is still under development and is expected to go live by the next month of November. The Bakkt platform aims to make it easy for its users to buy, sell, hold and spend their digital asset holdings.
During the launch, Bakkt CEO Kelly Loeffler said: “Bakkt is designed to serve as a scalable on-ramp for institutional, merchant and consumer participation in digital assets by promoting greater efficiency, security and utility. We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce.”
A number of industry giants like Microsoft, Starbucks, Boston Consultancy Group (BCG) and others have pledged support to Bakkt.
The first report about Bakkt’s physically settled Bitcoin Futures contract arrived last month in September. During that time ICE said: “Our first contracts will be physically delivered Bitcoin futures contracts versus fiat currencies, including USD, GBP and EUR. For example, buying one USD/BTC futures contract will result in daily delivery of one Bitcoin into the customer’s account.”
However, Bakkt’s plan of launching physically settled Bitcoin Futures received some criticism which claimed that the contracts can mask “hidden leverage”. Responding to this criticism, Bakkt said: “A critical element to price discovery is physical delivery. Specifically, with our solution, the buying and selling of bitcoin is fully collateralized or pre-funded. As such, our new daily bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset.”
The full-fledged launch of Bakkt is expected to drive huge institutional participation in the crypto market. Many experts believe that the launch of Bitcoin Futures by Bakkt will open the gates for Bitcoin ETFs.