Throughout 2018, the crypto bear market had been waiting for some good news like Bakkt futures to revive the industry.
First due to launch in December 2018, then on 24th January 2019, Bakkt has since been waiting for the U.S Commodity and Futures Trading Commission (CFTC) to give the go-ahead to the operations and so far it’s still unclear when the official launch will be.
Until the mandatory 30-day public review period has ended and CFTC Commissioners have voted to approve Bakkt’s exemption, the exchange cannot launch its one-day physically-settled futures contract.
The Intercontinental Exchange (ICE) backed platform differs with other futures contracts in that they are physically and not settled with cash. A cash delivery means that at the end of the contract, the holder of the position is simply debited or credited the difference between their entry price and the final settlement. For a physical delivery at the end of the contract, the holder of the position will either have to deliver the physical commodity if short or take delivery if long.
The physical delivery of Bitcoin means that the company will have to hold the asset in the warehouse with many consequent regulatory compliances to adhere to like anti-money laundering and know-your-customer rules, market surveillance, all subject to final review and approval by the U.S. CFTC.
This seems to be the main reason that is holding back the regulatory office from approving Bakkt futures.
The CME (Chicago Mercantile Exchange) and CBOE (Cboe Global Markets) got the green light faster because they are traditional and well established US options exchanges whereas Bakkt is trying to build the future of a totally new field, the digital asset infrastructure.
“Our statute allows us to regulate the new physically settled cryptocurrencies, but it contemplates an entity using a regulated trust or bank for custody of customer funds unless they opt to hold the assets in the clearinghouse,” CFTC Chairman Christopher Giancarlo said.
In that light, it starts to make sense why the CFTC has been slow to approve Bakkt.
“While there are many aspects of Bakkt that we’ll continue to develop and share, our initial focus is supporting regulated institutions in serving customers in this emerging asset class,” said Kelly Loeffler, CEO of Bakkt, recently.
Today marks the launch of user acceptance testing for bitcoin futures listed and traded at ICE Futures U.S. and cleared at ICE Clear US as Confomania announced back in May and June.
We expect to use UAT to ensure that customers have time to onboard and can test the trading and custody model we’ve built to their satisfaction” continues Kelly Loeffler, while Adam White, COO of Bakkt, announces the solution and the benefits the company is bringing to help grow the market “It’s our mission to support the development of trusted infrastructure for securely transacting in the new market for digital assets
The official launch date for trading is still unclear with the user testing being a very small step forward. There’s little belief that either will shake the price of Bitcoin.
