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Чт. Ноя 21st, 2019

Bakkt’s bitcoin futures and warehouse to debut in September

4 min read


One year ago, we announced our ambitious vision to bring institutional infrastructure to digital assets with an end-to-end regulated marketplace. That vision will be realized on September 23 when Bakkt launches custody and physically-delivered daily and monthly bitcoin futures contracts in partnership with ICE Futures U.S. and ICE Clear US.

Our contracts have already received the green light from the CFTC through the self-certification process and user acceptance testing has begun. Withapproval by the New York State Department of Financial Services to create Bakkt Trust Company, a qualified custodian, the Bakkt Warehouse will custody bitcoin for physically delivered futures. This offers customers unprecedented regulatory clarity and security alongside a regulated, globally accessible exchange in a market underserved by institutional-grade infrastructure.

In recent weeks, we hosted events in New York and Chicago where we gathered roughly 150 customers, regulators, and market participants to advance the dialogue in our industry, including a fireside chat with CFTC Commissioner Dawn Stump. In Chicago, we had a conversation on the regulation of digital assets with SEC Commissioner Hester Peirce, and we invite you to listen in.

While much has been said about deficiencies in crypto markets, the advances being made in the digital asset ecosystem are significant in terms of participants, platforms and applications — not to mention the rapid pace of development that continues through bear and bull markets. And by now, digital asset markets are global and well-developed, but they have largely been designed to serve retail customers rather than institutional participants. Bakkt is bridging that gap to access this market and solve for factors that have slowed institutional participation. Whether concerns relate to a lack of liquidity, market quality and regulation, or issues with reliability, fees, and operational risks, we are addressing these challenges with a transparent offering.

We’re starting with the introduction of a regulated and secure qualified custodian for bitcoin to support our futures contracts. The Bakkt Warehouse, which is part of Bakkt Trust Company, is built using the cyber and physical security protections that support the world’s most actively traded markets, including the NYSE. In addition, the independent governance and compliance requirements of a qualified custodian mean that the Bakkt Warehouse is designed to meet the highest standards of oversight.

Uniquely, Bakkt bitcoin futures contracts will not rely upon unregulated spot markets for settlement prices, thus serving as a transparent price discovery mechanism for the benchmark price for bitcoin. The importance of this differentiator is only amplified by reports of significant manipulative spot market activity, and other concerns such as inconsistent anti-money-laundering policies and weak compliance controls.

Bakkt’s bitcoin futures will be exchange-traded on ICE Futures U.S. and cleared on ICE Clear US, which are federally regulated by the CFTC. Regulated exchanges differ from trading platforms, such as crypto spot markets in many respects, including risk management, compliance and market surveillance.

The Bakkt futures contracts will also be covered by the existing guaranty fund at ICE Clear US, which has an established risk waterfall across multiple commodities markets. An incremental $35 million is being contributed to the existing guaranty fund with the addition of these new futures contracts. Importantly, we’ve designed the Bakkt Warehouse to provide regulated, secure custody of bitcoin that is protected by $125 million in insurance.

Providing a trusted ecosystem is our first objective. To do that we are setting a higher standard, including an institutional compliance and anti-money laundering program, settlement prices that are distinct from unregulated spot prices, comprehensive market oversight, a guaranty fund contribution and insurance. The trading and risk management tools that make all of this possible have been centuries in the making.

Looking back to Milton Friedman’s prescient remarks in 1999, just as the internet was taking hold, his clarity about the future of an internet-connected economy was striking:

“The one thing that’s missing, but that will soon be developed, is a reliable e-cash. A method where buying on the Internet you can transfer funds from A to B, without A knowing B or B knowing A.”

It was a provocative, perhaps largely unnoticed remark at the time, but was followed a decade later by the watershed Bitcoin white paper and blockchain. Today, we’re helping institutions, consumers, policy makers and regulators engage in this emerging market through a trusted, secure and compliant platform.

We are excited about supporting the future of digital assets at Bakkt. Until our launch on September 23, we’ll continue onboarding and testing with market participants. If you’re interested in trading the Bakkt Bitcoin Daily or Monthly Futures contracts, contact us at sales@bakkt.com. We look forward to continuing our work with market participants to bring more trust, access, opportunity and utility to digital assets.

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