Bakkt, a subsidiary of the Intercontinental Exchange (ICE), which owns the New York Stock Exchange, was granted approval from the U.S. Commodity Futures Trading Commission for crypto-settled Bitcoin futures.
These contracts would allow institutions to buy and sell the rights to Bitcoin at different intervals into the future, allowing institutions to gain exposure to the asset while acting as a tool for more sophisticated trading strategies.
Unlike existing Bitcoin futures contracts from the Chicago Mercantile Exchange (CME), which are only settled in cash, contracts with physical settlement can act as a “transparent price discovery mechanism.” Methods for price discovery with institutional participation are critical, especially when considering reports that 95 percent of trading volume is wash trading.
The New York State Department of Financial Services also gave approval to Bakkt Trust Company, Bakkt’s qualified custodian, to warehouse Bitcoin for these contracts. These Bitcoins will be protected by $125 million in insurance, said the firm.