“In conjunction with our exchange and clearing partners at ICE, 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.”
Today, we’re pleased to update you on the launch of bitcoin futures contracts developed by Bakkt in collaboration with ICE Futures U.S. and ICE Clear U.S. https://t.co/8G3YcFbPl2
— Bakkt (@Bakkt) May 13, 2019
Two futures contracts will be listed. One will be based on a daily settlement Bitcoin future while the other will be a monthly Bitcoin futures contract.
Together with the announcement, the company also said that they were working closely with the US Commodity Futures Trading Commission in order to be compliant with federal regulations, as well as to meet major requirements in terms of investors protection.
Bakkt CEO Kelly Loeffler, however, did not specify anything about the launch date, and also she didn’t explicitly say that the company’s proposal to self-custody its Bitcoin and clear through its parent company’s warehouse (Intercontinental Exchange’s ICE Clear US) had been approved.
She explained that in conjunction with Bakkt and clearing partners at ICE, they will be working with their customers over the next several weeks to prepare for user acceptance testing (UAT) for futures and custody, which they expect to start in July. She added that they expect to use UAT to ensure that customers have time to onboard and can test the trading and custody model that’s been built.
As per announcement Loeffler said that the price formation in benchmark contracts will be supported by proven tools to detect abusive or disruptive trading practices, including wash trades. That means that the settlement prices on ICE Futures U.S. will be based on prices discovered in BAKKT’s physical delivery contracts without relying on unregulated cash markets. She also noted:
“Bakkt will contribute $35 million into the clearinghouse risk waterfall. This puts our own “skin in the game” and aligns our interests for market integrity and safety with market participants.”
Loeffler revealed that her company has brought on Marc D’Annunzio as its General Counsel, bringing on experience in securities law, M&A, among other sectors that are pertinent to cryptocurrency and the legislature it is under the jurisdiction of.
For physical delivery and secure storage of bitcoin, an integrated custody service will be fulfilled by Bakkt’s qualified custodian, subject to regulatory approval. Safekeeping will be supported by insurance, cybersecurity, and comprehensive compliance, including an anti-money-laundering program and blockchain analytics.
Still a Lot of Work on Regulation
This news comes after crypto enthusiasts, down and up the board, have been literally praying for Bakkt to launch, citing continual delays and a fear that the trading platform was never going to launch.
Just for reminder, since announcing the platform in August 2018, Bakkt has pushed back its launch date on several occasions. Originally, Bakkt executives planned to launch the first futures contract on December 12. Shortly after the announcement, though, the team pushed that date back to Jan. 24, 2019. A government shutdown and several regulatory hurdles now place the launch in July this year.
Causing a Bitcoin Bull Run
As news broke this morning that Bakkt has committed to testing Bitcoin futures this July, traders reveled in soaring prices and a newfound expectation of increased institutional interest in the digital asset class. As per the time of writing Bitcoin was up for enormous 17,22% to $8.257.
Analyst Josh Rager noted that Bitcoin’s price action over the past five weeks is eerily similar to that seen during the end of the previous bear market.
$BTC – 3D chart Super Guppy
Amazing similarity between the last bear market prior to uptrend
Bitcoin had a similar parabolic push out of accumulation, followed by a pullback and uptrend
Watching for a potential pullback where I’ll add more to the stack pic.twitter.com/JABErMhlMq
— Josh Rager 📈 (@Josh_Rager) May 12, 2019
Last month, Bakkt acquired crypto custodian service Digital Asset Custody Company (DACC), announcing that the firm filed with the New York Department of Financial Services to operate as a trust company to serve as a Qualified Custodian for digital assets.
They have also collaborated with banking firm BNY Mellon to securely distribute private keys.