Bakkt today released more information about their physically settled Bitcoin futures. The contracts will be traded on Intercontinental Exchange’s electronic trading platform and regulated by the U.S. CFTC.
Bitcoins for the futures contracts, being physically settled, will be stored in Bakkt’s regulated warehouse. Each contract will be 1 bitcoin in size and will be priced in U.S. dollars to 2 decimal places. Trading will be from 8:00 PM to 6:00 PM with a pre-open at 7:55 PM Eastern Prevailing Time. Minimum price fluctuations will be $2.50 per contract and block trades may be executed at $0.01 per contract. Block trades will need to be 10 or more bitcoins minimum. Exchange and clearing fees will be $0.50 on each side. The position size limit will be a maximum of 100,000 contracts in any contract date.
After enduring several delays in the release of the futures, Bakkt is still waiting on full regulatory approval from the CFTC. Considering that Bakkt was launched by Intercontinental Exchange who also owns the New York Stock Exchange, it seems likely that regulatory approval is right around the corner.
Will the launch of Bakkt’s physical futures start a bull market in Bitcoin? Probably not. However, like the announcement by Coinstar, it should be positive on the price in the long run. Bakkt will always need to hold some Bitcoin reserves.