Bakkt, a bitcoin futures market is owned by the Intercontinental Exchange Inc., is expected to be approved by the U.S Commodities Futures Trading Commission (CFTC).
According to a Wall Street Journal report, Bakkt, the first-ever bitcoin settled futures contract will soon receive regulatory approval from the CFTC for its futures contract.
The report further notes that Bakkt has been working with the CFTC to get its business plan a green light, that revolves around the physical delivery of BTC to potential investors. However, Bakkt is the first ever futures contract to offer Bitcoin-settled futures product.
The current Bitcoin futures exchanges in the United States market like CBOE and CME are money-settled, which means their contracts are settled with the USD and not with the cryptocurrency.
Kelly Loeffler, the CEO of Bakkt said that the cash-settled contracts have some advantages still a physically-settled BTC futures contracts are required to fortify the infrastructure backing the crypto asset.
She also said that it is great to have cash-settled contracts, yet there is a need for physical delivery. And further emphasized that the objective of Bakkt is to build a comfortable environment for potential investors to invest in crypto assets.
Experts believe that relying on the demand of the crypto asset and the trading activity on the exchange, the scheduled rollout of Bakkt in January would impact the supply of the dominant crypto and could lead to a surge in the price of Bitcoin.
Jake Chervinsky, securities litigation attorney at Kobre & Kim said that Bakkt will custody and deliver real bitcoin. Which means institutional inflows could reduce supply and maybe surge the price too. He further added that this is distinct from other regulated futures markets such as CBOE and CME, which only deal in cash-settled futures contracts.
ICE in the United States is acknowledged as a CFTC-registered appointed contract market which lets the institution to certify the futures products by itself without the approval of the CFTC.
Jake further noted that even if ICE doesn’t require the direct approval from the CFTC. It still needs to operate with the commission to receive the green light for its newly developed market.
Both CFTC and Bakkt have been operating together to solve some of the crucial problems related to the futures contract. And the CFTC is also continuously supervising Bakkt’s business plan to decide whether they meet the regulations or not.
Another major point of concern is with cybersecurity infrastructure because the cryptos are an easy target for cybercriminals and hackers. So, the CFTC is examining the Bakkt’s security framework and the mechanism in place to recuperate from a possible cyber attack.
Earlier last month, ICE announced that Bakkt would start trading BTC futures from January 24, 2019. If the exchange can gain the approval of CFTC by early next year then it is expected to launch the Bakkt futures market by the publicly announced date.