Bakkt, the Bitcoin Futures trading platform backed by Intercontinental Exchange Ltd. (ICE) was initially expected to launch in November 2018, only for the startup to announce on the proposed date that the U.S Commodity and Futures Trading Commission (CFTC) was still reviewing its application.
A Bloomberg report today quote sources close to the matter as saying that the reported delay in approving Bakkt’s application is linked to the fact that the startup wants to custody client’s Bitcoin.
The CFTC is worried about how Bakkt will keep client’s Bitcoins (apparently large volumes) safe without using the services of a bank or trust company. Bakkt also plans to settle the contract in physical Bitcoins and not cash like existing Bitcoin Futures offered by CME Group and CBOE Global Markets.
In simpler words, Bakkt wants to be the clearinghouse as well as the trust company, a situation that doesn't fit with the CFTC requirements.
However, today’s report suggests that Bakkt’s parent company, the Intercontinental Exchange may have found a more natural way to launch the new product without undergoing the CFTC’s long process.
Since the issue is with providing custody for Bitcoin, Bloomberg sources say Bakkt will apply for a crypto license with the New York Department of Financial Services (NYDFS). Such a permit which many cryptocurrency exchanges already hold will allow Bakkt to store clients Bitcoin while also providing the service of a clearinghouse by selling Bitcoin Futures contracts.
Although both the NYDFS and Bakkt hasn’t confirmed that the submission of an application, the sources told it might be the only way to boycott the CFTC’s high requirements and bring the Bakkt Bitcoin Futures Trading Platform closer to launch.
It would not be a full boycott, though, since the CFTC would still have to place its stamp on a state license before it can serve the U.S populace.
The regulators will also likely ask for public comments before approving the offering but will probably be open to doing so. CFTC Chair Christopher Giancarlo recently pledged to continue fostering the growth of the crypto industry.
The perfect conclusion would be that we are closer than ever before to the launch of the long-awaited platform that would open the gate for institutional investors to troop into the crypto market!