Bakkt wants to Launch Bitcoin Ethereum Futures This Quarter, Plan is Risky

The Block reports that Bakkt will announce a launch date for their product, and that launch should take place this quarter. Still there are questions, the plan seems rather risky according to some investors.

Bakkt Warehouse is still waiting for approval

Bakkt is still waiting for approval from the New York Department of Financial Services for their Bakkt Warehouse. Without extra service, Bakkt cannot offer the full insurance and risk-free environment that large, institutional investors demand.

The Warehouse, if approved, is best compared to a qualified bitcoin keeper. This bitcoin is necessary because Bakkt offers all their futures at real bitcoin. In May, Bakkt claimed that they would not go live with their one-day and monthly contracts if they could not live up to investor confidence.

Every contract complies with CFTC rules

The company claims that the infrastructure offered complies with all regulations so that institutional investors can receive or invest fiat money without any threshold. The parent company of Bakkt is Intercontinental Exchange (ICE), this is also the umbrella organization where the New York Stock Exchange is also covered. So it’s not surprising that they ate cheese from regulation and want to be careful. All futures contracts will therefore be approved by ICE Clear U.S. and meet the CFTC regulations.

CFTC stands for Commodity Futures Trading Commission, an independent agency of the American government.

A closer look at the product plan

At the bottom of this article you will find the Bakkt product plan. Several investors have gone through this and many of them still see too much risk.

Firstly, they note that the Bakkt guarantee fund is too small to cover all risk positions. ICE is contributing $ 35 million to Bakkt’s existing guarantee fund. This is to absorb losses on bitcoin future contracts. Guarantee funds are usually required and are a kind of guarantee for when insurers cannot pay the policyholders.

“This is not normal practice in clearing risk management,” said Ricky Li, co-founder of Altonomy trading company.

He questioned the size of Bakkt’s funds. According to the document, there could be 400 million dollars in risk positions, and on the other hand there is a guarantee fund of only 35 million dollars.

Ricky Li says that the guarantee fund may be a little on the low side, but on the other hand, Bakkt is at least popular. He says that other popular scholarships such as BMX are hardly transparent in how they protect consumers.