The Wall Street Journal report that Bitcoin trading platform Bakkt are expected to get regulatory approval for the first futures contract that aims to pay in cryptocurrency instead of cash.
Bakkt is a cryptocurrency payment system and trading platform created by the Intercontinental Exchange (ICE), and is expected to launch early in 2019. It was initially planned to launch in November 2018, but was postponed pending approval from the Commodity Futures Trading Commission.
The contract is aimed at “players who have stayed out of cryptocurrency markets out of concerns that they are unregulated and susceptible to manipulation.” Futures contracts allow investors to bet on the price of cryptocurrency. There are currently many Bitcoin futures contracts in existence, but Bakkt’s proposed contract will be the first to pay out in Bitcoin rather than dollars.
Bakkt are building an open, seamless global network that allows users to buy, sell, store, and spend digital assets safely and efficiently. They are seeking to develop “open technology to connect existing market and merchant infrastructure to the blockchain.”
New today from @Rubinations @WSJ: “The first futures contract that will pay out in cryptocurrency rather than cash is expected to soon get regulatory approval” https://t.co/bcfbn7wMRf
— Bakkt (@Bakkt) December 20, 2018
The developers are backed by the Intercontinental Exchange’s “proven financial market infrastructure and technology.” The ICE is a US company that owns exchanges for financial commodity markets. They currently operate 12 regulated exchanges and marketplaces.
The Wall Street Journal details how “the effort has received backing from major corporations such as Microsoft and Starbucks, which have the longer-term goal of making cryptocurrency transparent and regulated enough to allow customers to use it for retail purchases.”
Kelly Loeffler, chief executive of the ICE crypto platform, stated: “Once digital assets have more trust and regulation, people will be more comfortable using digital assets as currency.”
The ICE has been working alongside regulators at the Commodity Futures Trading Commission (CFTC) over the last few months to ensure that its business plans are in compliance with regulations. The project is reported to require an “exemption from the agency to allow it to hold on to customers’ Bitcoins, since CFTC statutes are written to account for cash, securities, and agricultural commodities such as wheat or coffee.”
The Wall Street Journal note that the CFTC staff are “currently reviewing ICE’s business plan. CFTC commissioners will likely vote on whether to approve the project in early 2019, after which the public will have 30 days to weigh in.”
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