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Crypto trading is a fast growing industry across the world and exchanges are making moves to accommodate digital assets in their offerings. As more exchanges avail crypto trading to the public, the industry could receive a much needed boost.
As crypto trading continues to grow, Bakkt has announced that they are commencing user acceptance testing for the Bitcoin futures contracts on the exchange. The user acceptance testing process will start on the 22nd of July. Bakkt is a subsidiary of the Intercontinental Exchange, an American firm that also owns the New York Stock Exchange. The Chief Operations Officer of Bakkt, Adam White, said that the company’s Bitcoin futures will be listed and traded on ICE Futures U.S. The futures will also be cleared at ICE Clear U.S.
Crypto markets need to improve a few things
As pointed out by White, institutional investors have had minimal participation in crypto markets. When compared to other financial markets, digital asset exchanges receive little attention from institutional investors. White believes that this is because the current infrastructure does not encourage investor participation. He says that there should be the establishment of clear regulatory guidelines and infrastructure improvement before investors can be attracted to the markets.
The COO also pointed out to the fact that digital asset exchanges have lower trading volumes and insufficient liquidity. Transparency in the prices of offering is another challenge and this is fueled by a lack of proper regulatory structures. Institutional investors are not provided with proper trading tools when they engage with digital assets and all these factors are detrimental to the growth of crypto trading.
In a bid to solve the challenges that crypto exchanges are facing, Bakkt is looking to provide compliant financial products. The compliance will be achieved by offering regulated custody as part of their Bitcoin futures contracts. Bakkt also has intentions to build an infrastructure that can be trusted by traders while providing a seamless global network that can be used to buy, sell and trade cryptocurrencies. If Bakkt makes good on their promise, Bitcoin trading will receive a much needed boost as more institutional investors can participate in its trade.
At the company’s trading desk, there will be a listing of daily settlement Bitcoin futures contracts. Using this, traders will be able to engage in same day market transactions. Additionally, there will also be monthly Bitcoin futures contracts listed on the trading desk. These will enable trading in the front month and across the forward pricing curve.
Bakkt will offer investors physically settled daily futures contracts for Bitcoin. Reports suggest that these contracts will be on offer for investors in over 30 countries around the world. Traders will have to go through strict KYC and AML checks before they are able to engage with the Bitcoin futures contracts offered by Bakkt. The launch of the products offered by Bakkt is only waiting for the green light from the Commodity Futures Trading Commission (CFTC).