Bakkt Plans Bitcoin Futures Testing for July

On Monday, Bitcoin futures exchange Bakkt revealed that it is proceeding with its intentions to release physically-settled Bitcoin futures products.

Bakkt CEO Kelly Loeffler stated in a blog post that the company had “worked closely” with the US Commodity Futures Trading Commission (CFTC) and the test for its Bitcoin futures contracts is scheduled for summer.

No launch date was mentioned, and Loeffler didn’t say that Bakkt’s proposal to self-custody its Bitcoin and clear via its parent company’s warehouse was approved.

Instead, the company will self-certify its Bitcoin futures products through ICE. Therefore, the CFTC will need to assess if the proposals violate any regulations or laws. If within the 10-day deadline the regulator does not see any problems, the products will proceed.

Both Cboe and CME self-certified their Bitcoin futures contracts in 2017. Unlike their products, however, Bakkt will deliver real Bitcoin, instead of the cash equivalent, after the expiration of a contract.

Per an unnamed person familiar with Bakkt’s process, the firm still does not have a final launch date, but will be cleared to move forward should the CFTC raise no objections.

“We did self-certify. What the blog post effectively means is we filed with the CFTC, it’s two [contracts], a daily and a monthly and what happens is after 10 days, they can self-certify,” the individual said.

On Monday, ICE released two documents elaborating the self-certification and listing of its two new products.

“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,” Loeffler wrote.

“We expect to use UAT to ensure that customers have time to onboard and can test the trading and custody model we’ve built to their satisfaction,” she noted.

Loeffler revealed additional details regarding Bakkt’s upcoming products. The company is listing two futures contracts: a monthly futures contract different from the one-day futures contract initially announced by the platform and a daily settlement Bitcoin future that would let customers “transact in a same-day market.” 

Bakkt will put $35 million of its funding into the clearinghouse risk waterfall which, according to Loeffler, “puts our own ‘skin in the game’ and aligns our interests for market integrity and safety with market participants.”

Bakkt also intends to utilize its qualified custodian to offer custody services, but it is still subject to regulatory approval.