Bakkt’s Imminent Launch of Bitcoin Futures Will Be Instrumental In Legitimizing the Crypto Market

After several delays, mostly due to regulatory hurdles, the Intercontinental Exchange-backed Bakkt platform has shared a product development update highlighting several compliance features which are likely to speed up the imminent launch of its Bitcoin futures.

As per the company’s CFTC filings, it will be launching two futures contracts:

  1. A daily settlement contract
  2. A monthly settlement contract

The two options will cater to both, customers who wish to transact in a same-day market and those wanting to leverage forward pricing. However, the key feature of these contracts will be the price discovery mechanism, which will not rely on unregulated markets.

According to the company’s official statement:

“Price formation in these benchmark contracts will be supported by proven tools to detect abusive or disruptive trading practices, including wash trades.”

This will be a major development for the market, which until now has relied on mostly unverifiable trading numbers and opaque price discovery, resulting in concerns surrounding market manipulation.

Moreover, since Bakkt’s offering will be physically settled, their price discovery is going to be much more transparent and able to meet regulatory requirements. The company also recently acquired the Digital Asset Custody Company (DACC), and is working with the New York State Department of Financial Services to get approval for providing qualified custody services, necessary for its futures product.

As these developments materialize, we are likely to see a shift towards such regulated products, allaying concerns around the lack of market transparency and security of digital assets. This will essentially promote institutional investment in crypto assets and legitimize Bitcoin as the cornerstone of this new asset class.

We firmly believe that crypto markets are poised for institutional involvement, and the coming months will see the space become significantly more secure, stable and compliant, prompting the further development of financial products based on crypto assets.

 

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