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Cryptocurrency Derivatives Series: Bakkt Becomes Pioneer To Introduce Regulated Bitcoin Option, Unveils Cash-Settled Futures Also

The new cryptocurrency start-up, ‘Bakkt’ established by the Intercontinental Exchange (ICE), has been in the buzzing news of cryptocurrency derivatives market by expanding their product line. 

Well, the objective of the firm is to offer new tracks especially for the institutional clients initially and now for retail traders to make an access for cryptocurrency trading. Cryptocurrency avenue did not have any ‘regulated options trading platform’ so far, though we come across many unregulated and OTC players to offer such derivatives instrument, it was badly in need by the segment.

Finally, it is ‘Bakkt’ who has launched the two new Bitcoin investment products, namely, monthly options and cash-settled bitcoin futures.

The COO of Bakkt, Mr. Adam White announced this news in a blog stating “Expanding the Bakkt Bitcoin Product Complex”.

Well, thereby, NYSE backed Bakkt has been the pioneer to introduce the regulated marketplace for the options trading of cryptocurrency, while they use their Bitcoin futures contracts of physical delivery mechanism as a benchmark to establish the complementary products.

The Bakkt Bitcoin Monthly Options are the first CFTC-regulated offering that derives from the Bakkt’s Bitcoin Futures. This prevents the underlying price differences that is prevalent in the unregulated spot exchanges. These pptions will expire just two days before the corresponding futures contracts.

While Bakkt Bitcoin (USD) Cash Settled Futures is 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. Unlike Bakkt’s physically deliverable futures contracts, the cash-settled contracts has no actual transfer of Bitcoins upon expiration.

The COO, Adam White beams up with the lingering hopes that these derivatives contracts will lead price discovery, and such new product line represent Bakkt’s mission to bring trust and utility to digital assets. While the major attention is targeted predominantly on the potential for the institutional play through this mechanism. He kept the doors opened not only for the institutions but for the retail investors. He said in the recent past as well, “Bakkt is really designed for the institutional trader. So this is a futures contract. That said, we expect this futures contract to trade through retail brokerages as well, so retail clients can trade this contract.”

By Niranjan Patil
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