ICE-Backed Bakkt Will Begin Trading Bitcoin Futures On Dec. 12th

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ICE-Backed Bakkt Will Begin Trading Bitcoin Futures On Dec. 12th

According to a recent notification provided by its owner, Bitcoin futures trading on Bakkt, the new platform launched by the Intercontinental Exchange in August, will commence on December 12. Every contract on the site will be made up of one bitcoin. The minimum tick size for trading bitcoin is $2.50. The futures contract will be cleared by ICE Clear US, which also clears transactions for the New York Stock Exchange.

Bakkt is predicted to be a game changer in the bitcoin investing business, backed by a varied array of large names such as Starbucks Corporation (SBUX) and Microsoft Inc. (MSFT). Bitcoin futures on the exchange are physically settled, which means that at the conclusion of the contract term, the party will get delivery of a bitcoin from the Bakkt Digital Asset Warehouse. Futures contracts at CME and Cboe, on the other hand, are cash-settled and dependent on the price of bitcoin at underlying cryptocurrency exchanges.

Will It Lead To Approval Of Bitcoin ETFs By The SEC?

The Bakkt announcement has sparked conjecture that its debut heralds the Securities and Exchange Commission’s approval of bitcoin ETFs (SEC).This is largely due to the fact that ICE’s exchange resolves issues raised by the SEC in a letter detailing its rationale for rejecting a bitcoin ETF earlier this year.

Bakkt will begin settling Bitcoin futures on December 12, 2018. Previously, the US Securities and Exchange Commission rejected nine Bitcoin ETFs based on the futures market because the BTC futures market was not sufficiently liquid. The arrival of Bakkt may alter the perspective of the SEC picture. October 22, 2018 — Joseph Young (@iamjosephyoung)

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It will— Michael Novogratz (@novogratz) October 22, 2018

The first issue to address is price formation. The federal government had voiced reservations about the valuations used for bitcoin ETFs, owing to the fact that the underlying cryptocurrency exchanges used to establish the price of a single bitcoin were not regulated.

Bakkt’s management has tasked itself with meeting “specific needs of regulated institutions, their customers, and stakeholders such as merchants and consumers.” In a September blog post, CEO Kelly Loefler outlined her team’s priorities for achieving these objectives.

The SEC also mentioned the lack of a custody provider for bitcoin delivery as an issue. While there are custody providers for cryptocurrencies, the participation of well-known institutional brands who bring proven and secure processes into the market is required to give it respectability. Recently, Goldman Sachs Group, Inc. (GS) and Fidelity Investments have either indicated interest in or implemented cryptocurrency custody solutions. Warehousing for bitcoin is one of the services that Bakkt intends to provide, and ICE’s support will assure that it is a prominent participant in institutional custody.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is very dangerous and speculative, and this article is not a suggestion by Investopedia or the author to do so. Because every person’s circumstance is different, a knowledgeable specialist should always be contacted before making any financial choices. Investopedia makes no guarantees or warranties about the accuracy or timeliness of the information provided on this site. The author owns 0.21 Bitcoin and 1 Litecoin as of the day this post was published.

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