Bakkt ‘Bitcoin futures contracts’ is finally here!

Bakkt, a new futures contract crypto service, is set to launch on 23 September. Despite two delays and a year of questioning, the Intercontinental Exchange-backed bitcoin warehouse and futures contract facilitator is finally due for launch.  

Bakkt, a joint venture of ICE, Microsoft, and Starbucks, will be delivering its services, which make it possible for physical delivery of Bitcoin. Its doors are open to institutional investors who can then take positions, both long and short. 

ICEs futures will be first to provide physical delivery of cryptocurrencies. It will do so through Bakkt secure warehouse or its online platform. 

The service will offer two types of futures contracts: daily and monthly futures. Daily futures will make it possible to physically, settle Bitcoin within twenty-four hours once the contract expires. 

This unique feature, (a day’s expiration period), makes ICE’s Bitcoin futures contracts attractive. Therefore, Bitcoin will be delivered on the second business day soon after the expiration date. 

Key Objectives

Bakkt objective is to attract more of institutional participation for trading cryptocurrencies. To meet this objective, this service will provide solutions to some common issues affecting crypto assets, including reliability, regulations, market quality, as well as fees and liquidity. The service will help to protect investors from service volatility of certain assets. 

After its launch, Bakkt’s data feed will be available for free up until June 2020. After this period, it will require a subscription to access its data feed. 

Why is Bakkt Causing a frenzy?

Currently, Bitcoin exchange is experiencing few and slow transactions; thus, the reason it is not a preferred mode of payment. However, Bakkt enables Bitcoin to be a more conventional monetary exchange. 

Bakkt will enable fast and reliable transactions. Due to this ease, Starbucks is planning to allow its customers to make payment via Bitcoin.  

This service is a step forward for the crypto community. However, the crypto community is divided over the impact of Bakkt futures services. According to John Todaro, the director of research at TradeBlock, “It will take time for these entities to become comfortable with the asset class, identify strategies that are best used to trade the space, understand crypto market liquidity, and also understand the different regulatory and tax obligations across jurisdictions they operate in.”