Nick Chong · 3 hours ago · 2 min read
Bakkt Bitcoin futures
Bakkt, a subsidiary of the Intercontinental Exchange (ICE), which owns the New York Stock Exchange, was granted approval from the U.S. Commodity Futures Trading Commission for crypto-settled Bitcoin futures. In addition, the firm received the green light from the New York State Department of Financial Services to create Bakkt Trust Company, a qualified custodian that will provide secure storage for it client Bitcoin.
As a result, the Bakkt Warehouse custody recently opened to allow customers to deposit Bitcoin into their accounts and become familiar with the process.
The Bakkt Warehouse opens today
It is regulated by the New York State Department of Financial Services (NYDFS) as a Limited Purpose Trust Company, providing customers with a Qualified Custodian of bitcoin
— Bakkt (@Bakkt) September 6, 2019
Although there are other Bitcoin futures contracts available to trade in the market, Bakkt’s physical-settled futures contracts will be the first of its kind. Set to launch Sept. 23, more details were recently unveiled by Bakkt.
Details on Bakkt’s contracts
Trading hours will be between 8:00 PM and 6:00 PM (next day) EDT with a daily settlement window between 4:58 PM and 5:00 PM. The contract size will be equivalent to 1 BTC with a minimum price fluctuation of $2.50 per bitcoin ($2.50 per contract) and block trades may be executed at $0.01 per Bitcoin ($0.01 per contract).
ICE hopes that Bakkt will be able to capture a significant share of Bitcoin’s trading volume in order to create price discovery. This could bring more regulatory clarity and security into the cryptocurrency industry by giving institutions more ability to participate.
Rampant wash trading
“About 88 to 92 percent of daily trading volume is fabricated depending on the day. Bitcoin’s daily trading volume is about 92 percent fabricated. [Among] the top 40 largest exchanges with actual volume, Bitcoin’s volume is about 65 percent fabricated. Almost all of this fabricated volume comes from OKEx, Bibox, HitBTC, and Huobi,” reads the BTI report.
Two even more in-depth reports submitted to the SEC by Bitwise confirms the presence of market manipulation.
Unlike other BTC contracts, Bakkt Bitcoin futures will settle using real Bitcoin at contract expiry (rather than the dollar equivalent). This may trigger significant inflows of institutional capital and liquidity into the space, making it harder for bad actors to manipulate market volume.
Bakkt will finally give investors the opportunity to operate within a “federally regulated exchange,” according to Bakkt CEO Kelly Loeffler.