Bakkt, the company creating a short-term futures contract for the Bitcoin market, recently revealed why they chose BTC for the product upon which they would base their contract on. This comes a day after they stated that they would be pushing the launch of their product around 1 and a half months ahead of its original launch.
The price of Bitcoin has led to investors looking to the skies for some sort of Hail Mary, as the price moves closer towards the zero mark. This is long awaited by HODLers to come in the form of launch for Bakkt, which has now been postponed to the next year. While this was met by dismay by many investors, the delay will provide breathing room for the product.
Bakkt clarified that it was being developed in close conjunction with the United States Commodity and Futures Trading Commission [CFTC], which has the jurisdiction to regulate Bitcoin owing to the coin being ruled as being a commodity.
Reportedly, Bakkt has been asked why they were starting with Bitcoin, with the reply from them being:
“Bitcoin today accounts for over half of total crypto market capitalization and has been deemed to be a commodity, and its derivatives are regulated in the US by the CFTC…As the world’s most liquid and widely distributed cryptocurrency, and where we’ve seen the most customer demand, Bitcoin’s profile creates a liquid product on which to build a futures contract.”
Moreover, they also stated that they are working with the CFTC to allow them to conduct a “thorough review” of the daily futures contract and warehousing solution. According to them, their products represent a “critical shift” in the evolution of cryptocurrency markets.
Notably, Bakkt is backed by the InterContinental Exchange [ICE], the parent company of the New York Stock Exchange [NYSE], which has led to a “level of collaboration” that is unprecedented between the exchange, customer and regulatory levels. They went on to state:
“We are focused on every aspect of delivering an institutional grade crypto warehouse solution and believe this is a significant step in building confidence in this asset class.”
Moreover, Bakkt also stated that the prices in the Bitcoin contract will serve as a price discovery contract, due to the general transparency and regulation of futures markets.
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