The much-anticipated Bitcoin-based futures exchange from Bakkt has announced the launch date for the trading of daily futures contracts.
Physically-Traded Futures Contracts
Bakkt, the new cryptocurrency exchange platform backed by Intercontinental Exchange (ICE), has announced the launch date for its much-awaited Bitcoin futures trading product. The announcement was made through a press release published on ICE’s official website.
ICE is a Fortune 500 financial markets company that runs 12 regulated exchanges and six clearing houses across the world, including the NYSE (New York Stock Exchange).
According to the notice, the trading will commence on December 12th, 2018. The Bakkt Bitcoin (USD) Daily Futures Contract is a physically-settled daily futures contract for Bitcoin held in Bakkt LLC, ICE’s digital asset warehouse.
The contracts will be cleared and guaranteed by ICE Clearing US, the central counterparty for all ICE-cleared forex futures trades. The notice refers to only USD products although, earlier last month, the firm had announced that the initial launch would include GBP and EUR trading pairs.
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.
— Bakkt (@Bakkt) September 25, 2018
Bakkt has applied for the required regulatory approvals. The platform will enable institutional investors to participate in Bitcoin futures contracts via a regulated market infrastructure.
Contract Fee and Structure
As per the notice, Bakkt will charge a $1.00 combined exchange and clearing fee per side, with a minimum price movement of $2.50 per contract.
The exchange had announced earlier through its Twitter handle that it would adhere to a strict policy of physical delivery. The contract won’t be able to trade on margin, use leverage, or serve to create a paper claim on a real asset.
With our solution the buying and selling of bitcoin is fully collateralized or pre-funded.
Our new daily bitcoin contract will not be traded on margin, use leverage or serve to create a paper claim on a real asset.
— Bakkt (@Bakkt) August 20, 2018
A Regulated Platform Built on ICE’s Infrastructure
Bakkt intends to create an open, seamless global network to enable its customers to buy, sell, store, and spend digital assets in a simple, safe, and efficient manner.
These futures contracts will be traded on ICE’s electronic trading platform, which, according to the firm, offers industry-leading speed and reliability. The platform is regulated by the CFTC (the U.S. Commodity Futures Trading Commission), the agency responsible for regulating the futures and options market in the United States.
There has been a lot of market anticipation around the launch of the futures contracts by Bakkt just like the hype surrounding the announcement of the futures contracts by CME and CBOE last year. The news last year helped fuel a massive rally which ended in Bitcoin price climbing to nearly $20,000 in December 2017.
There is a hope that the Bakkt futures contract launch will open the doors for participation from institutional investors and pump BTC’s price beyond its previous highs.
Do you think that this announcement will act as a catalyst for the next Bitcoin rally? Let us know in the comments below.
Images courtesy of Shutterstock and Twitter/@Bakkt.