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Bitcoin Futures

06/14/2019
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  • Bakkt
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The exact starting date of Bakkt bitcoin futures testing has become known. It will happen on July 22, as Adam White, the Company CEO, reported in his blog. The appearance of this financial instrument became known almost a year ago, but only now it was possible to solve all technical and legal issues.

What is Bakkt?

Bakkt cryptocurrency trading platform was created by ICE International Exchange, which already owns 23 exchange platforms. Such financial giants as Galaxy Digital, Pantera Capital, and Horizons Ventures were involved in this project financing. Intercontinental Exchange, Microsoft and Starbucks also played their parts in the project. However, even such reputable representatives of the industry could not immediately solve all the cryptocurrency trading issues.

According to Adam White, the Head of Bakkt, the most difficult issue is the lack of reliability of bitcoin pricing mechanisms and the increased volatility of this asset. So the main efforts at platform launching were made to eliminate the influence of these factors.

However, almost a year of hard work allowed the platform to solve all the issues. From July 22, the institutional investors will be offered to buy bitcoin futures. Contract specifications are not yet known, but previously a rather interesting idea was reported. A day after the purchase, the corresponding amount of bitcoins will be transferred to the wallet. Nevertheless, the seller may close the contract earlier, and then there will be no transfer.

Bakkt and Bitcoin ETF

Two agencies regulate the circulation of cryptocurrency financial contracts in the United States: CFTC (Commodity Futures Trading Commission) and SEC (Securities and Exchange Commission). While it is still possible to come to an agreement with the first one, the second one has a clearly negative opinion on the financial contracts with reference to blockchain.

Jay Clayton, the Head of SEC, during the interview with CNBC, said that an approval of cryptocurrency contracts could only happen after solving the issue of market manipulation. At the same time, he acknowledged that his agency has no mechanisms for global control over cryptocurrency price.

However, the fact that a tool with bitcoin delivery will appear in the United States will be able to somewhat alleviate the situation. The financial industry leaders, such as ICE Clear US, are involved in Bakkt futures development. They are hardly could provide control over cryptocurrencies price. However, no one doubts the ability to guarantee the fair value of asset delivery.

Bakkt Launching Consequences

According to Dan Morehead, the Head of Pantera Capital, Bakkt futures launch in industry is no less important for the market than the approval of Bitcoin ETF contracts. The new financial instrument will allow large investors to enter the market without the slightest risk. Ensuring Bitcoin delivery to the wallet solves the issue of asset’s safekeeping, and protects against any risks.

The profit of Pantera Capital, cryptocurrency hedge fund, over the past five years amounted to 10,136.15%. The company began operations in 2010; and now it maintains a very conservative investment strategy.

The launch of Bakkt bitcoin futures was originally planned for August 2018; following that, the dates were postponed twice. If this time the start takes place on time, there is a chance to see another rally on the cryptocurrency market. The emergence of affordable and safe tools will attract new investors. Besides, the fact that the process of cryptocurrency legalization in the United States will reach a new level will also serve its purpose.

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