A latest report on Monday, Oct. 22, shows that Intercontinental Exchange (ICE) will launch Bitcoin Futures contract on its Bakkt platform by the mid of December 2018. Intercontinental Exchange - the parent company of New York Stock Exchange (NYSE) - said that Bakkt will offer physically settled Bitcoin Futures contract cleared by ICE Clear U.S.
The official report notes: “Each futures contract calls for delivery of one bitcoin held in the Bakkt Digital Asset Warehouse and will trade in U.S. dollars and others. One daily contract will be listed for trading each Exchange Business Day.”
Unlike the Bitcoin futures contracts provided by CBOE and CME which are cash-settled, Bakkt’s Bitcoin futures contract provides settlement in actual Bitcoin (BTC) tokens. All the Bitcoins backing the Bakkt Futures contract will be held by in the ICE Digital Asset Warehouse.
Bakkt’s physical Bitcoin futures can be traded against EUR, USD, and GBP. Baker’s CEO Kelly Loeffler has clarified that they won’t provide margin trading for their futures contract. Putting further light into this, she said: “A critical element to price discovery is physical delivery. Specifically, with our solution, the buying and selling of bitcoin is fully collateralized or pre-funded. As such, our new daily bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset. ”
Announcement of the Bakkt Platform
During early August 2018, ICE announced the launch of its new crypto venture ‘Bakkt’. Bakkt is an ‘open and regulated, global ecosystem for digital assets’ which aims to enhance and streamline digital-asset-spending in global commerce.
ICE’s major purpose of launching Bakkt is to create a well-regulated and secured marketplace while making it easy to buy, sell, and spend crypto assets. The Bakkt platform will host several consumer applications and will provide services alike for both - retail and institutional players.
ICE Chairman, Jeffrey C. Sprecher said: “In bringing regulated, connected infrastructure together with institutional and consumer applications for digital assets, we aim to build confidence in the asset class on a global scale, consistent with our track record of bringing transparency and trust to previously unregulated markets.”
The Bakkt platform has received support from global organizations like Microsoft, Boston Consultancy Group (BCG), Starbucks and other. These organizations will work in coordination with Bakkt to launch different digital assets services. Furthermore, Bakkt also leverages Microsoft’s cloud-based services for its operations.
Bakkt Platform Likely to Open Floodgates for Institutional Entry
Experts believe that ICE’s years of expertise in dealing with institutional products will prove beneficial for Bakkt. The arrival of Bakkt is expected to bring a huge institutional inflow of money in the crypto market.
Moreover, higher liquidity into Bakkt’s Bitcoin futures will make way for other institutional products like the Bitcoin ETF.