ICE’s Bakkt Launches Bitcoin Options, Cash-Settled Futures

Bitcoin options and cash-settled futures contracts are now live on the Bakkt crypto derivatives exchange.

Just over three months following the launch of its physically-settled Bitcoin futures product, crypto futures exchange Bakkt is expanding its product offerings with the launch of CFTC-regulated monthly Bitcoin options and cash-settled futures contracts. The announcement came in a blog post published by COO Adam White on Monday, December 9.

In the time since the launch of the cash-settled futures contracts yesterday, Bakkt said on Twitter that over 1,000 contracts have been traded.

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BTC physically-settled futures are “a benchmark contract that provides the foundation for us to develop complementary products”

Of Bakkt, which began its product offerings with physically-delivered Bitcoin Monthly Futures in September, Adam White said that “we have a benchmark contract that provides the foundation for us to develop complementary products based on the needs of our customers.”

And indeed, Bakkt’s monthly options are described in the post as “the first CFTC regulated option on futures contract for Bitcoin, “this contract is based on the benchmark Bakkt Bitcoin (USD) Monthly Futures contract and settles into the underlying futures contract two days prior to expiry on ICE Futures.”

The post also explains that the Bakkt Bitcoin (USD) Cash-Settled Futures are “available on ICE Futures Singapore, an Approved Exchange in Singapore that offers participants in Asia and abroad a convenient, capital efficient way to gain or hedge exposure to bitcoin.”

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CoinDesk reported that while any ICE customer can trade these contracts, the fact that they are offered through the Singaporean branch of the exchange seems to suggest a focus on bringing in capital from Asian markets.

Comparing Bakkt’s expansion strategy with ICE’s

In the post, White compared Bakkt’s expansion strategy with that of its parent company, the Intercontinental Exchange (ICE).

Citing the availability of “hundreds” of oil contracts across a number of different types of tradeable assets, White said that “these additional contracts have provided market participants with the price discovery and risk management necessary to serve the trading and hedging needs of producers, consumers, traders and institutions.”

“At Bakkt, our mission is to bring trust and utility to digital assets,” the blog post says. “These new contracts represent an important milestone in the development of this emerging asset class and our bitcoin product complex.”

The BTC derivatives market is heating up

When Bakkt originally launched in September, the platform’s initial trading volume was lower than many expected that it would be. However, trading volume on the platform has been slowly and steadily increasing.

Bakkt’s latest announcement comes approximately a month before Chicago Mercantile Exchange (CME) Group is set to launch options on its BTC futures contracts in January. However, CME’s pricing will be dependent on its Bitcoin index, while Bakkt’s pricing will be based around its existing physical product

Additionally, Malta-based cryptocurrency exchange OKEx announced on Monday that it would begin offering options trading later this month.

Bakkt CEO Kelly Loeffler was named as the next Senator of the state of Georgia by State Governor Brian Kemp last week. Loeffler will step down as the company’s CEO before she is sworn into office on January 1st, 2020.

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