- The company will offer different types of future contracts in July.
- A go-ahead from customers and regulators could speed up its launch.
The Intercontinental Exchange (ICE) subsidiary, Bakkt, is still in the process of developing its futures platform aimed at institutional capital. Through a post on Medium, the company announced on Monday May 13 the development of user acceptance tests (UAT, for its acronym in English) for bitcoin futures and crypto custody, which are expected to begin in July of this year.
The Atlanta-based company said it is continuing to work in partnership with the Commodity Futures Trading Commission (CFTC) of United States to build a platform that meets customer requirements in terms of clarity and stability, but that also conforms to all standards of US federal regulations. n this sense, the objective is for the Bakkt bitcoin futures to comply with all regulations and at the same time be a really attractive product for institutional investors.
Bakkt indicated its intentions to launch the user acceptance tests, which are intended to provide a space where customers can interact with the platform and test the mechanisms of trade and custody that are being developed. The company said more details about the test network will be provided as the implementation date approaches, scheduled for July this year.
The note also referred to the regulatory processes in which the company finds itself with the New York State Department of Financial Services (NYDSF) to become a fiduciary company authorized to operate as a qualified custodian of digital assets. This permit would give the company the green light to be able to offer custody of digital assets in a legal manner, facilitating their safekeeping once they are physically settled.
The idea of the Bakkt team is to offer institutional actors the possibility of buying, selling, storing and spending cryptocurrencies with the greatest of ease. That is why for more than a year the company has been collaborating with different regulators in the US with the aim of launching a bitcoin futures product with physical settlement.
About Bakkt Bitcoin futures contracts
In relation to Bitcoin futures trading, the Bakkt team made the following clarifications:
- There will be two types of futures contracts: One will be a daily settlement contract, and the other will be a monthly settlement contract.
- The prices set for these contracts are supported by tools that identify irregular trading practices, so the values set will not be based on the figures reflected in unregulated markets.
- ICE Clear US will set the margins for Bakkt bitcoin futures, including the initial margin guarantees and the variation margins associated with the investment risk. This goes in harmony with the guidelines established by the futures market regulators.
- Bakkt will provide a fund of USD $35 million as compensation, which supports the interests of the company in the integrity and security of both the market and the transactions of its participants.
- Finally, a custodian qualified by Bakkt will carry out the safe storage of the BTCs. This guarantees the existence of insurance, optimal security measures and full compliance with the guidelines against money laundering.
The team also indicated that it is working with the New York State Department of Financial Services to become a fiduciary company and operate as a qualified custodian of digital assets, in conjunction with future contracts regulated by the CFTC. In this way the criteria for the custody and delivery of future Bitcoin are met.
Differences of Bakkt contracts with respect to other Bitcoin futures
The fact that Bakkt bitcoin futures will operate through ICE, will allow the self-certification of its products for the Bitcoin futures, for which the CFTC will have to evaluate if the proposals violate any law or regulation. If the agency does not find any problem within a period of 10 days, the platform has authorization to launch this line of products.
This model differs from what traditionally do other companies that trade futures, since they explicitly request the CFTC to approve a product.
Unlike what CME and CBOE offer, Bakkt will provide users with BTC balances, instead of the equivalent amount in fiat money when a contract expires.
In this regard, a nearby source indicated during an interview that the company does not have a fixed launch date, but at the moment that the CFTC provides its approval, it will have the freedom to launch this new line of services:
We self-certify … We present to the CFTC two types of contracts: One daily and one monthly. If nothing happens after 10 days, everything is self-certified.
Source: Medium Bakkt