Category Archives: Bakkt

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Lawyer Claims Bakkt Can Bypass Approval for Physical Bitcoin Futures

Crypto lawyer Jake Chervinsky has determined that Bakkt does not need direct approval from the Commodity Futures Trading Commission (CFTC) to launch the physical Bitcoin futures, so it appears the launch date will proceed as scheduled.

The cryptocurrency markets are highly anticipating the launch of physical Bitcoin futures on Bakkt on 12 December 2018. It is a new cryptocurrency exchange which will be owned by the Intercontinental Exchange (ICE), the same organization that runs the New York Stock Exchange (NYSE).

14/ A designated contract market like ICE can file a self-certification submission as late as one business day before initial listing.

That means ICE technically doesn’t have to file Bakkt’s papers until Tuesday, December 11 for Bakkt to launch futures on Wednesday, December 12.

— Jake Chervinsky (@jchervinsky) November 6, 2018

According to Chervinsky, ICE is a CFTC certified designated contract market, allowing it to self-certify new futures offerings without any prior approval. ICE and Bakkt can submit the filing for physical Bitcoin futures as soon as one day before launch. Chervinsky says the CFTC will probably publish a press release about the futures when the self-certification occurs.

16/ Consider the process that CME & CBOE went through to get approval for their bitcoin futures last year.

Both of them ended up self-certifying, but only after *months* of negotiations with the CFTC & changes to their products.

The CFTC explains here: (https://t.co/B0tuugmPDx)

— Jake Chervinsky (@jchervinsky) November 6, 2018

However, if the CFTC disapproves of the physical Bitcoin futures, they could find some way to block them after launch. At this time, there is no evidence that this will happen otherwise, the controversy would have already been underway as seen when cash-settled Bitcoin futures were launched on the Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBoE). It took months of negotiations for CME and CBoE to reach an agreement with the CFTC, even though those exchanges can self-certify like Bakkt.

Bakkt CEO Kelly Loeffler indicates that the plans for the physical Bitcoin futures would be reviewed and approved by the CFTC before launch, probably to maintain 100% compliance with regulators and avoid problems in the future.

The reason the Bakkt physical Bitcoin futures are important is that they would allow institutional investors to buy Bitcoin in a safe and regulated way on major stock trading platforms. The futures settle the same day and investors receive actual Bitcoin in their accounts, unlike the cash settled futures in Chicago. Market demand for the physical Bitcoin futures is expected increase demand on Bitcoin spot markets, which could possibly lead to a major Bitcoin price increase.

 

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Physical Bitcoin Futures on Bakkt, Launch Set for December 12, 2018

The Intercontinental Exchange (ICE), which operates 6 clearinghouses and 12 stock exchanges including the New York Stock Exchange (NYSE), has announced that physical Bitcoin futures will go live on 12 December 2018 on their first crypto exchange, Bakkt. Physical Bitcoin futures could lead to a major rally driven by institutional investments.

The Bitcoin for physical Bitcoin futures will be held in the ICE Digital Asset Warehouse, which is ICE’s new cryptocurrency custodian. After an investor buys physical Bitcoin futures they will be settled the same day at 5 pm Eastern United States time, and delivered into the investor’s account at the Digital Asset Warehouse, after which point the investor can use the Bitcoin as they wish. This essentially provides a way for investors and traders to directly buy Bitcoin in a safe and regulated way, and the physical Bitcoin futures should be available on all stock trading platforms.

There are trillions of USD traded and invested on stock trading platforms, and the physical Bitcoin futures will open up Bitcoin to this immense pool of capital. To put this in perspective, Bitcoin’s market cap is USD 112 billion as of this writing on 23 October 2018, while the NYSE alone has a USD 18.5 trillion market cap, while globally the 60 major stock exchanges in the world have a market cap of USD 69 trillion. If even a small fraction of the money in stocks is diversified into Bitcoin, it could lead to the biggest Bitcoin rally in history.

There are already Bitcoin futures available on the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE), but the difference is these are cash settled futures and there are no bitcoins backing them. Therefore, money invested into the currently existing cash-settled futures does not increase spot demand for Bitcoin. The physical Bitcoin futures on Bakkt will directly increase spot demand for Bitcoin.

Other details about the Bakkt physical Bitcoin futures include the contract size which will be 1 bitcoin, the contract symbol will simply be BTC, and trading for each daily contract will occur from 8 pm to 6 pm Eastern United States time with a pre-open at 7:55 pm. Therefore, unlike Bitcoin spot exchanges, there will be a couple of hours each day where the market is closed for physical Bitcoin futures. The physical Bitcoin futures will be listed on the ICE Futures U.S. exchange, and the clearinghouse will be ICE Clear U.S.

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Bakkt Re-Affirms Imminent Physical Bitcoin Futures

It’s been about two months since the Bakkt cryptocurrency exchange was announced by the Intercontinental Exchange (ICE), along with the groundbreaking announcement that it would offer the first officially licensed and regulated physical Bitcoin futures in the United States.

Bakkt has re-affirmed that these physical Bitcoin futures are on the way as of 25 September 2018, and everything appears on track for them to launch in November 2018, little over a month from now. The exchange is saying that physical Bitcoin futures will be available in GBP and EUR in addition to USD.

Our first contracts will be physically delivered Bitcoin futures contracts versus fiat currencies, including USD, GBP and EUR. For example, buying one USD/BTC futures contract will result in daily delivery of one Bitcoin into the customer’s account.

— Bakkt (@Bakkt) September 25, 2018

Currently, the only Bitcoin futures available are cash-backed and cash-settled futures on the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE). Since these Bitcoin futures in Chicago are entirely backed by cash and settled for cash they can be considered paper Bitcoins. Investors purchasing paper Bitcoins in Chicago do not increase spot market demand and in fact, divert money away from Bitcoin spot markets long term.

Additionally, shorting Bitcoin futures in Chicago probably leads to market manipulation that causes Bitcoin’s price to go down, particularly around the time monthly futures contracts expire. It appears traders could be manipulating Bitcoin spot markets to crash to increase short sale profits from future contracts.

The Bitcoin futures that will probably be launched by Bakkt in November 2018 will be the first physical Bitcoin futures. They will be settled for actual Bitcoins on a daily basis, meaning an investor who buys Bitcoin future contracts on Bakkt will directly receive Bitcoins into their accounts on the same day when contracts settle. This means that physical Bitcoin futures contracts on Bakkt will directly increase spot demand for Bitcoin and, therefore, increase global Bitcoin price.

Effectively, the physical Bitcoin futures contracts on Bakkt will allow traders and investors to buy Bitcoin in a safe and regulated way, ideal for institutional investors. It is likely that the physical Bitcoin futures contracts on Bakkt will be available on all major stock trading platforms as well, which could pave the way for a major Bitcoin rally.

 

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Bakkt CEO Details Mission for Regulated Crypto Trading

The Intercontinental Exchange (ICE), owner of the New York Stock Exchange (NYSE) and numerous other major exchanges around the world, is launching a cryptocurrency exchange named Bakkt. Its CEO, Kelly Loeffler, has revealed some details about Bakkt’s mission and protocol in a Medium post.

Loeffler says Bakkt is “a new company designed to bring digital assets to the mainstream and help unlock the potential of this important technology” and that it is “working to make the vision for wider application of digital assets a reality”.

According to Loeffler, the exchange developed out of a need for investors to have a safe and regulated way to trade, store, and spend cryptocurrency. Bakkt will have institutional grade infrastructure. Conditions are particularly ripe for Bakkt since its development is being orchestrated by ICE, the worldwide leader in stock and futures trading. ICE has the expertise and potential to launch every type of Bitcoin investment product possible in the future via Bakkt. They are starting with physical Bitcoin futures, which is a major development.

Currently, there are Bitcoin futures on CME and CBOE, but these are cash settled so they don’t directly impact Bitcoin’s global spot markets or price. The futures on Bakkt will be settled for physical Bitcoins every day, so they will have a direct impact on global Bitcoin price, and provide a channel for institutional investment to pour into Bitcoin.

Loeffler says one of the primary goals of Bakkt is to facilitate Bitcoin price discovery and it are doing this by ensuring that every physical Bitcoin futures contract has Bitcoin backing it. It does not want to issue any paper Bitcoins, since that would dampen Bitcoin’s price, so Bakkt will not have any leverage.

Looking at this a bit more broadly, Bakkt’s CEO is saying that it expect so much volume on Bakkt that it will determine global Bitcoin price. This is quite possible, since this is basically ICE’s answer to Bitcoin trading, and it could end up being the biggest crypto exchange in history. Physical Bitcoin futures are projected to be launched in November 2018, which could cause a major Bitcoin rally.

 

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Pantera CEO: Investors Overreacting to SEC Delay on ETF

Crypto hedge fund Pantera Capital’s CEO Dan Morehead has said that investors have been pushed into a state of panic by the SEC’s delayed decision on Bitcoin exchange-traded funds (ETFs).

Morehead said on Wednesday’s CNBC “Fast Money” that ETF wasn’t imminent, a view shared a week prior on the same show by Brian Kelly, who saw next year as the most likely date for approval rather than September. He commented:

“The main thing to remember is that Bitcoin is a very early-stage venture, but has real-time price feed — and that’s a unique thing. People get excited about the price and overreact… I still think it will be quite a long time until an ETF is approved. The last asset class to be approved for ETF certification was copper, and copper has been on earth for 10,000 years.”

The SEC has delayed another decision on approval of a Bitcoin ETF after several attempts by investors over the years to push one through. On the announcement of a delayed decision, Bitcoin lost further ground last week.

Morehead suggests that the new Bakkt project should be enough to hearten investors rather than to sell Bitcoin on the basis of a delayed decision. He explained:

“The ETF rejection is the same story we’ve had for five years. The SEC has been very cautious with an ETF… That’s huge news. That is going to be a very profound impact over the next five or 10 years for the markets, and, to my mind, that’s what people should be focused on.”

CNBC’s Fast Money regular Brian Kelly was the first to predict that an ETF was unlikely to happen this year, and is in total agreement with Morehead, arguing that a sell Bitcoin position is not the right one to be taking. He explained:

“It [Bitcoin] has had a tremendous run off of USD 5,800, and that was all really because people thought there was going to be a bitcoin ETF. The SEC came out and postponed that decision. A little spoiler alert, on September 30, SEC will likely postpone it again, because the market is not ready for it and the SEC hasn’t had the answers to their questions yet.”

 

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Starbucks Pro-Bitcoin but You Can’t Spend It in Stores Yet

Misleading reports following the Starbucks working partnership with the Bakkt ecosystem stated that Starbucks would be accepting Bitcoin in stores.

While this is not on its agenda quite yet, the multinational corporation has expressed its support for helping customers exchange their cryptocurrencies for fiat to spend in its over 27,000 cafes.

Partnership with Bakkt

Starbucks is the flagship retailer of Bakkt and has been given the role of developing trusted and regulated working relationships with clients who wish to exchange their Bitcoin to spend in retail stores.

Misleading headlines from outlets such as CNBC that ran with ‘New Starbucks partnership with Microsoft allows customers to pay for Frappuccinos with Bitcoin‘ appear to misunderstand the dynamic of the scheme and assume Bitcoin could directly be used to purchase goods.

A spokesperson for Starbucks spoke to Motherboard to clarify the logistics of its partnership, reaffirming that the exchange is merely a platform to change cryptocurrencies into US dollars that the cafe chain and other outlets can accept. Starbucks did not rule out the possibility of accepting Bitcoin in the future, however, saying it would continue to consider customers wants alongside the changing regulatory space.

Maria Smith, vice president of partnerships and payments for Starbucks, described the corporation’s role as ”pivotal” in the early stages of Bakkt.

Bringing it mainstream

The Bakkt venture is a Wall Street-regulated platform aiming to bring Bitcoin to a mainstream audience, with its founding members including Microsoft and the Intercontinental Exchange (ICE). Bakkt CEO Kelly Loeffler described its purpose as helping ”unlock the transformative potential of digital assets” on an international scale.

A press release from Starbucks Friday notes that the federally-regulated marketplace will, for now, facilitate trades just for Bitcoin to fiat as it is currently the most liquid digital currency.

 

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Brian Kelly Proclaims That Bakkt Is Biggest Crypto News of the Year

Hedge fund manager Brian Kelly, while appearing on CNBC’s Fast Money, has called Intercontinental Exchange’s announcement about its new Bakkt platform as the “biggest news of the year.”

Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange (NYSE), recently announced that with the help of technology partner Microsoft, it was planning to launch a new digital asset platform called Bakkt.

ICE also owns 23 exchanges worldwide apart from the NYSE along with many futures exchanges and clearing houses.  Starbucks and Microsoft will be major partners of Bakkt and will begin accepting Bitcoin and other cryptocurrencies. Bakkt is also planning on launching physically-settled Bitcoin futures by November 2018, which would be a mechanism for institutional investors worldwide to easily buy Bitcoin.

Kelly explained his “biggest news of the year” statement after rejecting that ETF would be approved by the SEC this year, suggesting that he’s not actually optimistic on them being approved in 2018, but the speculation surrounding them will maintain investor interest in Bitcoin regardless of the outcome.

He thinks that ICE’s move is better than Bitcoin futures due to its limitations, given that there are “a limited set of people that can trade it… And a lot of people use it for hedging.”

He recently stated that the last Bitcoin price boost following the CNBC announcement was here to stay, only to see the market drop again a week later. When asked if the ICE announcement might have more effect on prices and whether it would meet with success, he responded:

“Oh, yeah! Absolutely! I mean, they are talking about launching in November… They have been working on this in stealth mode for the last 14 months, they have already talked to regulators, they are ready to go.”

He put the lack of market response to “the biggest news of the year” down to time difference and that he expected there would be a response. Bitcoin at the time of writing is $7,473.89 (CMC). He suggested:

“Back in January, Bitcoin would have gone up 20% on this news. So, I think the bear market has just broken people’s spirit, frankly, and so people aren’t really looking for this… A lot of people I talked to today hadn’t seen the news–came out at 08:30 [UTC -04:00]–people hadn’t seen it till 2, 3 in the afternoon. So, the market is still digesting this, and remember most of Bitcoin trading happens in Asia; so, it was released at 08:30 this morning, that’s 09:30, 10:00 at night on a Friday night in Asia. [When] Asia wakes up, you might see this thing pop.”

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ICE to Launch Exchange, Physically-Settled Bitcoin Futures

The Intercontinental Exchange (ICE), owner of 23 exchanges worldwide including the biggest stock exchange in the world, the New York Stock Exchange (NYSE), and many futures exchanges and clearing houses, is creating a cryptocurrency exchange called Bakkt. Starbucks and Microsoft will be major partners of Bakkt and will begin accepting Bitcoin and cryptocurrency. Even though this is all huge news, the biggest news might be that Bakkt is planning on launching physically-settled Bitcoin futures by November 2018, which would be a mechanism for institutional investors worldwide to easily buy Bitcoin.

Currently, there are Bitcoin futures contracts on CME and CBOE in Chicago, but these futures contracts are settled for cash, and therefore not a good way to buy actual Bitcoins, although there has been at least one exchange for physical (EFP) with the cash-settled futures contracts.

The Commodities Futures Trading Commission (CFTC) will have to approve Bakkt’s proposal but, if approved, it will be the first physically-settled Bitcoin futures in history. The futures contracts will expire every day and be settled for real Bitcoins, making this an excellent way for institutional traders around the world to buy Bitcoin. This could be just as good, or even better, than a Bitcoin exchange traded fund (ETF), which many experts have said would cause a major Bitcoin rally to levels far beyond USD 20,000.

Bakkt will have a built-in clearing house and cryptocurrency custodian, and will have all the regulatory compliance of any ICE exchange, so it seems the physically-settled Bitcoin contracts have a high chance for approval. These futures are projected to launch in November 2018.

Another major part of this story is that Starbucks will begin accepting Bitcoin and cryptocurrency via Bakkt. Vice President for Partnerships and Payments at Starbucks, Maria Smith, says, “As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted, and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks.”

If all goes according to plan, Bakkt could become the biggest cryptocurrency exchange in the world. This is perhaps the news all crypto enthusiasts have been waiting for, and the Bitcoin market has begun to crawl steadily upwards after this story broke the morning of 3 August 2018.

 

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