Customers will receive the actual Bitcoin on a contract’s expiration rather than the fiat equivalent.
Bakkt, the intercontinental exchange, stated it will add cash-settled futures offerings before 2020.
“We have the intention of offering a cash-settled contract as well. Retail customers can trade our monthly futures contract”, Adam White, COO of Bakkt, said.
In this way, the company intends to expand from its current physically-settled offerings to cash-settled futures before next year. The Intercontinental Exchange (ICE) subsidiary is working on adding the new product.
The new cash-settled monthly futures will be offered through ICE Clear Singapore, the firm Singapore-based clearinghouse. Also, it will be traded on ICE Futures Singapore.
How Will It Work?
The main benefit of implementing this idea is that traders will be able to access the products worldwide. The process will be similar to the structure of current future contracts for digital assets through ICE Clear U.S.
According to White, this product is a result of what customers need and demand. The new contract will be built on the same data utilized by Bakkt’s physically-settled bitcoin futures contract.
Currently, in order to make the project something real, Bakkt is in discussions with the Monetary Authority of Singapore (MAS).
Bakkt was launched in August 2018. According to recent reports, it spent more than a year building and launching its physically-settled bitcoin futures contracts. It is the first of its kind.
The dynamic is similar to other futures contracts. Customers receive the actual Bitcoin on a contract’s expiration rather than the fiat equivalent; thus, these people do not lose money because they will invest in cryptocurrencies.
But, the Chicago Mercantile Exchange (CME) is currently the only provider of a cash-settled Bitcoin futures contract in the United States of America. Now, with this new product, Bakkt will be able to offer both.
Recently, Bakkt announced its new plans to develop an app that would allow customers to purchase goods with Bitcoin from merchants. Bitcoin would be used as a form of payment in this field. The release date is set for some time next year.
In recent weeks, the company announced its intention to offer options contracts on top of its existing futures product.
Besides, the company informed that they would be expanding its custody services to all institutional clients.
Previously to this announcement, Bakkt only offered its custody services to customers who trade futures on ICE. Thanks to the app and the company’s new decision, more people would have access to these benefits.
White noted that retail customers have largely driven the Bitcoin market over the past few years.
The company intends to boost and support the projects of retail customers too. “Retail customers can trade our monthly futures contract”, he assured.
A futures contract is a technique to hedge positions and reduce the risk of losing money. Customers can receive cryptocurrencies instead of fiat currencies when a contract ends. It allows trading these digital assets in a foreseen period of time, establishing first their prices.
The futures are part of the traditional economy and now it is the time for cryptocurrencies, the new and current form of money used for international companies and investors.
By María Rodríguez
