- Bakkt is opening bitcoin warehouse on September 6
- Daily and monthly futures will launch on September 23
- Futures are settled in real bitcoin and not cash
Bakkt is opening its bitcoin warehouse beginning September 6, 2019. Clients will be able to deposit their funds for physically delivered bitcoin futures to prepare for its futures contract offerings later in September.
Secure Storage for Bitcoin
The Intercontinental Exchange-backed bitcoin futures provider made the announcement via twitter on August 28, 2019, stating that its qualified custodian, Bakkt Warehouse, will begin offering the storage of customer’s Bitcoin in early September. The firm said it will begin offering customers secure storage for bitcoin “to prepare for the launch” of its daily and monthly futures contracts on Sept. 23. The tweet stated:
On Sept 6, our Warehouse will begin offering secure storage of customer bitcoin to prepare for the launch of Bakkt Bitcoin Daily & Monthly Futures when they launch on Sept 23
These contracts will enable physical delivery of bitcoin with end-to-end regulated markets and custody
— Bakkt (@Bakkt) August 28, 2019
Physically Delivered Futures
Bakkt is a fully owned subsidiary of the Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange (NYSE). The firm has recently acquired a New York state trust charter from the New York State Department of Financial Services (NYDFS). Commenting on the approval, Bakkt CEO Kelly Loeffler explained that the NYDFS allows them to create Bakkt Trust Company, a qualified custodian. Bakkt Warehouse, which is part of Bakkt Trust Company, will custody bitcoin for physically delivered futures.
The launch of Bakkt’s bitcoin futures has been postponed several times due to regulatory holdups but with the new announcements, it finally seems that the firm will now begin offering customers access to the first physically settled futures contracts in the United States. Bitcoin futures differ from cash-settled futures contracts since customers receive actual bitcoin when they bet on the expiry of a contract as opposed to receiving the cash equivalent of the same. CoinFlex has launched a similar product this week.
Offer a Margined Instrument
Bakkt intends to offer customers access to a margined daily product, seeing its value proposition as offering traders a regulated alternative to existing spot markets. Bakkt CEO Kelly Loeffler is on record telling the press that its daily contract was designed to offer a margined instrument, he said at the time:
“So when you think about transacting on the futures exchange you’re operating within a [federally] regulated exchange.”
The daily bitcoin future will enable customers to transact in a same-day market, while monthly bitcoin futures contracts will enable trading in the month ahead and across the forward pricing curve. Since the contracts are physically settled, the selling Clearing member would be required at settlement to deliver to the buying Clearing Member a specified quantity of Bitcoin.