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Bitcoin Futures Contracts

Bakkt Offers More Insight On Its Bitcoin Futures Contracts Ahead Of July Test Date

· 13 Jun 2019 in Crypto News
Basil has three years of freelance experience writing on disruptive technologies. He focuses on breaking news and education pieces; helping to spread the gospel of Blockchain. He hopes to have his own blockchain company one day; helping the world through its innovative ledger technology. https://twitter.com/basil_kimathi

Bakkt, the much-anticipated crypto exchange, has announced that it plans to begin testing its futures contracts tied to Bitcoin on July 22 this year.

In a blog post that likened Bakkt’s launch to the Apollo 11 moon landing, Adam White, the chief operating officer wrote on Thursday that the platform “will initiate user acceptance testing” for its Bitcoin futures contracts, which will be listed and traded by its parent company. Bakkt announced on May 13 that it would begin testing in July, but it did not provide a specific date and time.

In the May report, the company announced a partnership with the Intercontinental Exchange (ICE) as its exchange and clearing partner.

Also, the report states that the ICE backed platform would commit $35 million to cover the default risk of its trading members. According to Kelly Loeffler, CEO of Bakkt, “this puts our own ‘skin in the game’ and aligns our interests for market integrity and safety with market participants.”

Details Of The Bitcoin Futures Contracts

The ICE provided new information for Bakkt’s monthly contract, as well as updated the contract specifications for its daily contract.

Both contracts will see a minimum price fluctuation of $2.50 per BTC (with each contract containing one BTC). Trades may be executed at $0.01 per BTC, with a listing cycle that can last for as long as 12 months (for the monthly contract) or 70 consecutive eligible contract dates (for the daily contract).

The final settlement for both contracts will be at the Bakkt warehouse.

Looking back, ICE announced last year that it would launch a physically settled bitcoin futures contracts. Unlike cash-settled agreements, such as what CME Group offers, customers receive an actual bitcoin on the contract’s expiration, and not that fiat equivalent to bitcoin’s price.

According to Bakkt, “Compared to other markets, institutional participation in crypto remains constrained due to limitations like market infrastructure and regulatory certainty. This results in lower trading volumes, liquidity, and price transparency than more established markets like ICE’s Brent Crude futures contract, which has earned global trust in setting the world’s price of crude oil.

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