After long delays due to regulatory scrutiny, the Bakkt futures platform from the Intercontinental Exchange (ICE) has confirmed that product testing has started. As per a tweet from the company, daily and monthly futures will begin testing with participants from all over the world, July 22, 2019.
When Bakkt first got delayed, it causes a lot of negative sentiment in the cryptocurrency market as it was an instance of a huge financial institution under adequate regulatory oversight accepting the potential and financial viability of Bitcoin.
A month ago, the platform confirmed they would start testing in July 2019 after a prolonged discussion with regulators.
Bakkt is seen as an important development for the perception of Bitcoin as it gives the cryptocurrency, which has seen a lot of criticism, an air of legitimacy.
The platform is additionally a massive improvement to market efficiency as it is the first instance of a physically-settled future in Bitcoin. Price discovery and hedging will be considerably improved as the physical settlement mechanism will mirror best practices from traditional financial markets.
Leveraging the thriving ecosystem of market makers, liquidity providers, trading desks, and broker-dealers will help Bakkt solidify itself as the best futures trading platform in the cryptocurrency ecosystem. They may not match the variety of contracts seen on Deribit and BitMex, but they will induce a market with true price discovery – something incredibly vital for the long term acceptance of Bitcoin.
Why Bakkt Matters
The launch of Bakkt shows the potential of Bitcoin and the cryptocurrency market as a whole. While regulators in America are helping a new round of FUD emerge, the development of a platform like Bakkt, backed by ICE and the NYSE is a testament that there is value in this market.
India’s Secretary of Economic Affairs recently recommended an outright ban on cryptocurrencies. This is near impossible in the United States given the amount of development going into building the ecosystem from institutions with close ties to regulators.
Despite the comments from important bureaucrats and financiers, it remains to be seen if there is any scope from the United States to carry out a blanket ban on cryptocurrencies; all of this is owed to the work done by the likes of Bakkt and Fidelity.