Took a bit longer than expected, but the beta is here. But still without regulatory approval of it’s custodian infrastructure. It’s another step forward.
What will be different about Bakkt’s derivative? According to reports, its CEO has said they’ve “worked closely” with the U.S Commodity Futures Trading Commission (CTFC) as the instrument was being developed. As well, the product is aimed at institutional investors, merchants and retail investors, with a sample group involved in the beta test beginning at the end of July.
A daily and monthly contract settlement will be offered. “Compared with previous options for BTC futures, Bakkt’s product will settle in Bitcoin rather than fiat," says Williams.
"As a result, Bakkt investors will be operating inside the Bitcoin market, rather than outside of it. In contrast, CBOE’s and CME’s futures settled in fiat and played against Bitcoin’s speculative nature for a quick return. Bakkt’s customers will be institutional investors interested in cryptocurrencies as long-term investments.”
A little more on why Bakkt Bitcoin futures, if it sees the light of day, has the potential to be a big, big deal on affecting Bitcoin’s price.
The key paragraph, if you don’t want to read it all:
This will be the first BTC futures that require settlement in actual coin. Of course, there is nothing “physical” to be exchanged in this case. The term refers to the fact that when the contract expires, payment must be made in the actual underlying asset. This creates real demand for actual bitcoin.
In contrast, the existing futures markets (CBOE and CME, plus Bitmex) are all paper contracts. There is no exchange of anything other than make-believe bets on what the future price of an asset will be. In this sense, these contracts are more like “vapor contracts”, as they are ephemeral in nature.
When physical futures contracts come into play, everything changes.