The Bakkt Warehouse which is a part of the Bakkt Trust Company has announced that it will be offering secure storage for Bitcoins. The plan was initially submitted last year, but the launch was delayed due to lack of necessary regulatory approvals, multiple times. It will finally be operational from early September. It will also be one of the very first custodians of Bitcoin in Wall Street.
The Bakkt Warehouse is owned by Intercontinental Exchange (ICE) which is the parent company of the New York Stock Exchange (NYSE). They obtained a ‘New York state trust charter’ from the New York State Department of Financial Services (NYDFS) and a green flag from the Commodity Futures Trading Commission (CFTC), and were ready to be functional as a Bitcoin warehouse for the customers.
Kelly Loeffler, CEO of Bakkt, revealed that the consent from the NYDFS has allowed them to build the Bakkt Trust Company, which is a qualified custodian and Bakkt Warehouse, will be operating under it for safekeeping Bitcoins for daily and monthly ‘physically delivered futures.’ For this venture, Bakkt Warehouse will be working in partnership with ICE Futures US and ICE Clear US.
The daily Bitcoin future will enable customers to buy and sell Bitcoins in a same-day market, while, the monthly futures will allow trading in the front month and across the forward curve (financial function prices graph).
Earlier, Bakkt CEO Kelly Loeffler told CoinDesk that its daily contract that “it is designed to provide a margined instrument so when you think about transacting on the futures exchange, you’re operating within a [federally] regulated exchange.” She added:
This offers customers unprecedented regulatory clarity and security alongside a regulated, globally accessible exchange in a market underserved by institutional-grade infrastructure.
All the contracts of Bakkt Warehouse will be settled physically, which implies that the customers will receive actual Bitcoins from Bakkt Warehouse on expiry of their contracts. Unlike, the cash-settled futures contracts offered by companies like the Chicago Mercantile Exchange (CME), in which customers, on expiry of their contracts, get back their fiat equivalent.
Bakkt tweeted their announcement. It said:
On Sept 6, our Warehouse will begin offering secure storage of customer Bitcoin to prepare for the launch of Bakkt Bitcoin Daily & Monthly Futures when they launch on Sept 23. These contracts will enable physical delivery of bitcoin with end-to-end regulated markets and custody.
Reports from earlier today stated that CME’s Bitcoin futures made a new record by making an average daily volume of $515 million in May 2019.