Bakkt Announces Warehouse for Physically-Delivered Bitcoin Futures
Cryptocurrency trading platform Bakkt has announced that its physically-delivered bitcoin futures will be informally open to customers next month.
On August 28, 2019, the platform took to Twitter to announce that Bakkt Warehouse, its qualified custodian arm, would begin providing storage services for customers on September 6, 2019, in anticipation of its forthcoming daily and monthly bitcoin futures offerings.
According to a recent blog post from the firm, the warehouse leverages the same protections that are used by the New York Stock Exchange (NYSE), which shares its parent company with Bakkt.
“The Bakkt Warehouse, which is part of the Bakkt Trust Company, is built using the cyber and physical security protections that support the world’s most actively traded markets, including the NYSE,” per the post. “In addition, the independent governance and compliance requirements of a qualified custodian mean that the Bakkt Warehouse is designed to meet the highest standards of oversight.”
The post also noted that the warehouse is protected by $125 million in insurance.
Physically-Delivered Bitcoin Futures
Bakkt’s physically-delivered bitcoin futures are scheduled to go live on September 23, 2019, after years of anticipation from the Bitcoin community.
Physically-delivered contracts enable customers to place bets on the price of an asset at a future date. Customers will receive the actual BTC they bet on when contract expires. Delivery of this bitcoin will come from this recently announced warehouse.
In contrast, cash-settled contracts, which companies such as the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) offer, are based on the price of bitcoin on cryptocurrency exchanges.
As part of prep work for this launch, Bakkt acquired Digital Asset Custody Company; a crypto custodial service focused on institutional investors.
Since it announced its decision to launch a futures contract where customers are given bitcoin once their contract expires, Bakkt has been the subject of some scrutiny within the bitcoin and regulatory communities.
While the platform was initially announced last year, Bakkt had to put plans on hold as it ran into some regulatory and compliance issues. It eventually cleared its regulatory hurdles, and after a seemingly successful soft beta back in July 2019, it seems poised to truly launch.
Also in July 2019, LedgerX announced that it had launched the first-ever physically-delivered bitcoin futures product, beating Bakkt to the punch. However, it quickly became clear that LedgerX had not received all of the necessary regulatory approval.