Bakkt Bitcoin Futures Test


BBakkt, the Intercontinental Exchange’s bitcoin platform has announced plans to start testing two bitcoin futures contracts from July 22 onwards.

The start-up cryptocurrency platform has been facing regulatory delays since it originally announced plans to begin trading last year. The platform is still waiting for its custody warehouse to receive regulatory approval.

Details of bitcoin futures testing

In a recent blog post, the COO of Bakkt, Adam White mentioned that the platform will enable testing bitcoin futures contracts for user acceptance. The bitcoin futures will be listed, as well as traded by the parent company itself.

While Bakkt had already announced that testing would begin in July, the specific date has only been mentioned now. In addition, Intercontinental Exchange provided details regarding Bakkt’s monthly contract while also updating specifications for daily contracts.

Both futures contracts will be experiencing a minimum price fluctuation of $2.50/bitcoin, with each contract containing only 1 bitcoin. Users will be allowed to execute trades at $0.01/bitcoin, with listing cycles that last as long as 12 months for monthly contracts. In the case of daily contracts, users will be allowed to execute trades for the same amount for as long as 70 consecutive eligible contract dates.

The final settlement for both bitcoin futures contracts will take place at the Bakkt custody warehouse. All digital assets will be stored in this custody warehouse.

According to the post, Bakkt’s mission is to enable the development of trusted infrastructure for secure transactions of digital assets in the modern market.

A closer look at Bakkt

Bakkt is aiming to pull more financial institutions into the space of cryptocurrencies. As such, it has partnered with the Intercontinental Exchange’s clearing house and futures exchanges in order to introduce new products to the market.

The bitcoin futures will be listed on the ICE Futures US, they will be cleared at the ICE Clear US and they will be physically delivered to Bakkt’s custody warehouse.

Certain exchange operators such as Cboe Global Markets and CME Group already offer bitcoin futures testing in the US. However, Cboe’s settles for its latest contracts have not been renewed as of yet.

As opposed to Cboe and CME’s cash-settled futures, the contracts for Bakkt will be settled physically. In other words, bitcoins will be physically delivered to Bakkt’s custody warehouse when contracts expire. Unlike cash-settled futures, customers will receive actual bitcoins when contracts expire, and not the fiat equivalent of the bitcoin’s price.  

What Bakkt had said last year

Taking a step back, Bakkt had announced last year that it would be launching two physically-settled bitcoin futures contracts. While this was supposed to happen during the second half of last year, pending regulatory approvals have delayed the launch.  

This delay seems to have stemmed in part from the company’s plans to warehouse its own bitcoins. It can also be because the start-up intends to clear trades through the Intercontinental Exchange’s clearing house.

Bakkt has however, not announced a final launch date as of yet. However, the launch of futures testing for user acceptance is not a small step. The company hopes that this launch will quickly usher a new and easier standard that allows users to access the crypto market.

Just as with other cryptocurrencies, users will need to wait and see how Bakkt bitcoin futures test perform.

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