- They executed the first trade Sunday at 8:02 p.m. ET
- The futures payout in bitcoin upon settlement
- Bakkt is backed by ICE, Microsoft and Boston Consulting Group
The International Exchange (ICE), the parent company of the New York Stock Exchange (NYSE) has finally launched Bakkt’s bitcoin futures. The long-awaited launch should attract investors who have always looked at cryptocurrency trading with suspicion.
The Institutional Money is Here
The launch of the Intercontinental Exchange-owned bitcoin warehouse and futures contract facilitator on Sunday, September 22, 2019, finally opens the door for institutional investors who can now trade on cryptocurrencies in a federally regulated platform. According to a report by the Wall Street Journal (WSJ), trading kicked off at 8:00 pm EDT with the first trade at $10,115.00 and Bakkt believes that consumers, businesses and Wall Street will embrace cryptocurrencies.
Futures contracts are a legal agreement between a buyer and seller to buy and sell a commodity at a certain time or price. This enables investors to bet on whether the underlying asset’s value will gain or lose. With Bakkt, investors will be able to trade in daily or monthly. Bakkt partnered with the International Exchange (ICE) as well as Microsoft venture arm M12 and Boston Consulting Group as investors. The company has also teamed up with coffee chain Starbucks to allow people and institutions to buy, sell, store and send cryptocurrencies.
The futures will be delivered physically which means they pay out in bitcoin upon maturity. This differs from ICE’s main competitor CMR Group’s futures contracts for cryptocurrencies introduced in which are settled in cash upon maturity; Physical settlement is used for other markets like bonds, oil, cattle, and metals.
Bitcoin One Step Closer to Regulatory Legitimacy?
With Bakkt’s bitcoin futures now being federally regulated, cryptocurrency enthusiasts are hoping the move will give digital currencies the missing link that has been legitimacy which has always been mired in controversy as a result of cases of illicit activities in the industry that is yet to fully develop wings. Interested observers will now see just how much pent-up demand there is among big-money traders for this hotly anticipated service. Bakkt’s data feed will be freely available through June of next year, after which it will require a subscription, according to a company FAQ.
For Bakkt, which has become the first of its kind to receive a green light from the US watchdog, the US Commodity Futures Trading Commission [CFTC] it has been a whole 13 months of delays and questions. The firm was cleared to launch custody and physically delivered daily and monthly bitcoin futures contracts in partnership with ICE Futures U.S. and ICE Clear US.