Bakkt crypto exchange announces firm ‘Go Live’ date for futures launch

Cobalt goes live with Deutsche Bank, XTX Markets and Saxo Bank on its FX post-trade infrastructure

It has been no secret that crypto enthusiasts have been begging for the management of the Bakkt crypto exchange initiative to complete the actions necessary in order to launch. Bakkt, the brainchild of Intercontinental Exchange (ICE), the owner and operator of the New York Stock Exchange, was to be the consummate crypto futures exchange, dealing in physically-settled futures contracts with state-of- the-art design that would appeal directly to the needs of the institutional investor. The initiative has had two delays, presumably to iron out technical back office details. CEO Kelly Loeffler announced today that all systems are set to go in June, with some offerings slated for July testing.

As we reported in April:

The uniqueness of the Bakkt concept is that it will settle Bitcoin futures contracts in kind, not in cash as with the CBOE or the CME. Institutional investors actively use derivatives like these to hedge their positions in a commodities market, but there have to be other intermediaries that warehouse the commodity and clearinghouses that provide the infrastructure to make the process work. Rules and accepted protocols have evolved over the past one hundred years or more and have been codified within the law.

According to the Commodity Futures Trading Commission (CFTC), the intricacies of these necessary intermediary and clearinghouse rules, as tedious as they might be, needed to be worked out before a clearance could be given. CFTC chairman, J. Christopher Giancarlo, a noted friend of the crypto community, who has been given the affectionate name of “CryptoDad”, has intimated that positive steps were being made to clear any respective hurdles in the process:

It’s often a fine detail in one protocol or another that makes all the difference.

Other press reports seem to confirm what Giancarlo had been hinting:

Bakkt was revealed to be working with major U.S. bank BNY Mellon to secure Bitcoin and other digital asset private keys and to have acquired Digital Asset Custody Company (DACC), while securing a $100 million insurance policy with global insurance carriers.

In Bakkt’s announcement, Loeffler also confirmed that her staff was working closely with the CFTC to iron out any remaining details to ensure that Bakkt was compliant with all regulatory standards and satisfied the needs of the agency for “trading, transparency, and market certainty”. Loeffler also reiterated that:

Bakkt will be launching its physically-backed futures contract in June. The product will take two forms: 1) a daily settlement future; 2) monthly futures.

Hopefully, the wait is now over, and the highly anticipated Bakkt crypto exchange, designed with every bell and whistle that institutional investors desire for hedging purposes in an actively traded market, will soon be operational. Regulatory compliance will also not be an issue, which may require a competitive response in-kind from existing crypto exchanges in the global network, a necessary step for the crypto market to rise to its next level of maturity.

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