Bakkt to launch Institutional grade Futures and Custody in USA
According to a recent blog post from CEO of Bakkt Kelly Loeffler, the company will be bringing institutional infrastructure to digital assets in an end to end regulated marketplace on September 23rd 2019. Bakkt will launch its custody and Bitcoin Futures contracts in partnership with ICE Futures US ad ICE Clear US.
According to Loeffler, “Our contracts have already received the green light from the CFTC through the self-certification process and user acceptance testing has begun. With approval by the New York State Department of Financial Services to create Bakkt Trust Company, a qualified custodian, the Bakkt Warehouse will custody bitcoin for physically delivered futures. This offers customers unprecedented regulatory clarity and security alongside a regulated, globally accessible exchange in a market underserved by institutional-grade infrastructure.”
Bakkt CEO strongly believes that digital asset markets are global and well-developed, but they have largely been designed to serve retail customers rather than institutional participants. As such Bakkt is bridging that gap to access this market and solve for factors that have slowed institutional participation. Whether concerns relate to a lack of liquidity, market quality and regulation, or issues with reliability, fees, and operational risks, Bakkt is addressing these challenges with a transparent offering.
Bakkt will introduce regulated and secure qualified custodian for bitcoin to support our futures contracts. The Bakkt Warehouse, which is part of Bakkt Trust Company, is built using the cyber and physical security protections that support the world’s most actively traded markets, including the NYSE. 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.
In addition Bakkt bitcoin futures contracts will not rely upon unregulated spot markets for settlement prices, thus serving as a transparent price discovery mechanism for the benchmark price for bitcoin. The importance of this differentiator is only amplified by reports of significant manipulative spot market activity, and other concerns such as inconsistent anti-money-laundering policies and weak compliance controls.
The Bakkt futures contracts will also be covered by the existing guaranty fund at ICE Clear US, which has an established risk waterfall across multiple commodities markets. An incremental $35 million is being contributed to the existing guaranty fund with the addition of these new futures contracts. Importantly, we’ve designed the Bakkt Warehouse to provide regulated, secure custody of bitcoin that is protected by $125 million in insurance.
Finally Loeffler states, “Providing a trusted ecosystem is our first objective. To do that we are setting a higher standard, including an institutional compliance and anti-money laundering program, settlement prices that are distinct from unregulated spot prices, comprehensive market oversight, a guaranty fund contribution and insurance. The trading and risk management tools that make all of this possible have been centuries in the making.”