Bakkt to Self-Certify Bitcoin Futures, Looks to Launch as ICE’s Crypto Exchange Anticipation Builds
Finally! Bakkt is ready to launch its Bitcoin futures contract. In its latest announcement made Monday morning, Bakkt CEO Kelly Loeffler shared that they have “worked closely” with the US Commodity Futures Trading Commission (CFTC), the regulatory agency that oversees derivatives products and would be testing its physically-backed Bitcoin futures contracts this summer.
It has been further mentioned that as stated in the Bitcoin futures filing by the Intercontinental Exchange (ICE), the company behind Bakkt will be listed on a federally regulated futures exchange in the
User Acceptance Testing for Futures and Custody Start in July
Breaking down its products, Loeffler described that the product will take two forms viz. a daily settlement future and monthly futures.
Though no launch date is announced, it is indeed self-explanatory that the company’s plan to self-custody through ICE’s warehouse has been approved.
“In conjunction with our exchange and clearing partners at ICE, we’ll be working with our customers over the next several weeks to prepare for user acceptance testing (UAT) for futures and custody, which we expect to start in July,” stated Loeffler.
Bakkt will also contribute its own funding amounting $35 million into the clearinghouse risk waterfall that puts their “own skin in the game.”
Moreover, they are also planning to use its own qualified custodian to provide custody services, but it is subjected to regulatory approval.
Bakkt makes a play for Blockchain Week news coverage by self-certifying their bitcoin futures with the CFTC, a good step forward.
But, they still can't launch until NYDFS approves their warehouse, which could take a while.
They predict July 2019. I'll believe it when I see it. https://t.co/a5ctocUbhA
— Jake Chervinsky (@jchervinsky) May 13, 2019
Making Acquisitions To Become Qualified Custodian
Just last week, Bakkt had shared that they are working with the New York State Department of Financial Services to become a trust company and operate as a qualified custodian for digital assets.
On April 29, 2018, ICE had acquired Digital Asset Custody Company, a crypto custodial platform that offers native support for 13 blockchains and over 100 digital assets. About the acquisition, Adam White, COO of Bakkt had said that it was a crucial factor in the company's plan to launch Bitcoin future contracts.
However, this wasn’t the first acquisition, earlier this year in January, ICE subsidiary acquired certain assets in futures commission merchant Rosenthal Collins Group (RCG) – an independent future commissions merchant.
With its acquisitions, Bakkt has been pushing towards its goal to become an institutional-grade crypto platform and positioning itself for crypt custodial status.
Smoothen Out The CFTC Approval Process
A number of commentators in the industry have been calling out for the trusted cryptocurrency custodial platforms as an imperative requirement for broad institutional adoption of digital assets.
As Loeffler wrote in today’s announcement, the work toward becoming a trust company and operate as a qualified custodian
“continues and will enable custody for delivery of bitcoin futures.”
As part of this plan only, bakkt is partnering up with BNY Mellon to establish private key storage in various locations.
The original launch date of Bakkt has been in December 2018 that was pushed to 2019 but failed to go live even then due to failure to obtain CFTC approval. It seems most likely, the initial custody plans of Bakkt played a major role in the postponements, hence the acquisition to correct it by going for self-certification as a crypto custodian.
If successful, Bakkt would have the legal authority to act as a qualified custodian for Bitcoin among other virtual currencies that are expected to make the CFTC approval process smoother.