After months of anticipation, Bakkt, the crypto platform owned by Intercontinental Exchange (ICE), announced earlier today that it would commence user acceptance testing for physically-settled Bitcoin futures products and trading in July. The announcement made via a Medium post by Bakkt CEO Kelly Loeffler reads:
“Today, we’re pleased to update you on the launch of bitcoin futures contracts developed by Bakkt in collaboration with ICE Futures U.S. and ICE Clear US. We’ve worked closely with the CFTC to develop contracts that both meet our customers’ needs for trading, transparency, and market certainty, and are also compliant with Federal regulations.”
Loeffler revealed in the post how the company would be working with customers as part of the efforts to put all the necessary modalities in place as it gets ready for the launch of user acceptance testing exercise in July. “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,” she wrote.
The exchange did not reveal the launch date on the blog post. More details will be communicated to clients once available.
Two new Bitcoin futures
According to Loeffler’s post, Bakkt will launch two new Bitcoin futures contracts – a daily settlement Bitcoin future and a monthly Bitcoin futures contract. The former will allow clients “to transact in a same-day market.”
She added that the company had created some tools to prevent and detect abusive trading practices, such a wash trades. The settlement prices on ICE futures won’t rely on unregulated cash markets. Instead, they will be based on prices discovered in the platform’s physical delivery contracts.
Bakkt will also spend $35 million to cover the default risk of its trading members. “This puts our own ‘skin in the game’ and aligns our interests for market integrity and safety with market participants,” Loeffler said.
ICE first revealed its grand vision for a Bitcoin futures exchange that will lead to mass acceptance of cryptocurrency assets last year. However, Bakkt will not be the first exchange to provide physically-settled bitcoin futures. LedgerX received a regulatory green light from CFTC in 2017 to offer swaps and options for their US-based clients.