Bakkt Undergoing Testing for a Potential July Launch!
By Block Society
In a tweet earlier today on Monday, Bakkt at last provided clarity with regards to its plans to launch physically-settled Bitcoin futures products.
The Bakkt CEO, Kelly Loeffler, announced that Bakkt would be undergoing its testing phase on bitcoin futures this summer beginning in July, the first indication of a clear timeline of any sorts: “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… We expect to use UAT to ensure that customers have time to onboard and can test the trading and custody model we’ve built to their satisfaction.” The final launch date is still unknown.
Bakkt faced multiple delays in the past; it was originally slated to release on November 2018 but then it was postponed twice – first in December 2018 and then in January 2019. Ever since, Bakkt’s launch date has been on an indefinite hold in order for Bakkt to pursue comprehensive regulatory compliance.
Loeffler wrote “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.”
Bakkt filed three major documents with the CFTC today outlining its exchange infrastructure. Two of those documents detail the listing and self-certification of its two new products, a daily and a monthly futures contract.
The CFTC will assess whether there are issues with Bakkt’s proposition within a 10-day deadline. Absent any such issue, Bakkt’s offerings will move forward as planned.
Bakkt – as a subsidiary of the Intercontinental Exchange (ICE) – proposes to take custody of its products by physically settling Bitcoin through ICE’s clearinghouse. Bakkt is seeking to secure a trust company license under the New York Department of Financial Services instead of the federal route to clear a path for custody regulation. Along with seeking to use its own qualified custodian, one of Bakkt’s multiple initiatives is investing $35 million into the clearinghouse risk waterfall, thereby ensuring an alignment of interests to promote market integrity and safety.
It should be noted that Bakkt is taking an alternative approach than what CME and Cboe did with Bitcoin futures; instead of requesting the CFTC to approve its products, Bakkt will deliver actual Bitcoins upon a contract’s expiration. This entails more than self-certification like what CME and Cboe did. This leads to the expectation that institutional and retail investors have the ability to impact volumes (and to an extent, prices) of Bitcoin directly in a significant way compared to CME and Cboe.