Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange and operator of 12 regulated exchanges and marketplaces, has issued two new filings today with the Commodity Futures Trading Commission (CFTC) to implement Bitcoin futures contracts developed in collaboration with Bakkt, ICE Futures US and ICE Clear US.
Bakkt, the long-awaited cryptocurrency trading platform from ICE, has also announced a new target timeframe for its upcoming launch: July.
The company says it is working closely with the Commodity Futures Trading Commission (CFTC) to bring its new products – daily and monthly Bitcoin futures contracts – to market, following several delays that have stalled the project since its initial target date of December 12, 2018.
In an effort to satisfy the concerns of the CFTC, the new filings for the physically-settled Bitcoin futures contracts detail a number of procedures related to security.
- Description of Contracts, Custody and Settlement
- Rules and Rule Amendments Setting Forth Contract Terms and Conditions
- Description of Clearing Arrangements
- Access to Information Regarding Underlying Cash Market and Participants
- Description of Contracts with Third Parties to Enable Carrying Out Responsibilities
- Consultations with Market Professionals
According to Bakkt’s announcement,
“In conjunction with our exchange and clearing partners at ICE, we’ll be working with our customers over the next several weeks to prepare for user acceptance testing (UAT) for futures and custody, which we expect to start in July. We’ll provide more details in upcoming posts, but we expect to use UAT to ensure that customers have time to onboard and can test the trading and custody model we’ve built to their satisfaction.”
Bakkt says it will contribute $35 million into the clearinghouse risk waterfall.
“This puts our own ‘skin in the game’ and aligns our interests for market integrity and safety with market participants.
For physical delivery and secure storage of bitcoin, an integrated custody service will be fulfilled by Bakkt’s qualified custodian, subject to regulatory approval. Safekeeping will be supported by insurance, cybersecurity, and comprehensive compliance, including an anti-money-laundering program and blockchain analytics.”
As Bakkt pursues its goal of operating as a qualified custodian for digital assets, rival ErisX has also announced plans to launch later this year.
According to ErisX CEO Thomas Chipas, the platform is gearing up for launch.
“ErisX is about to launch a spot exchange for crypto, a physically delivered spot contracts, and once we wrap up some regulatory filings, we’ll be launching a futures exchange as well for physically delivered crypto later this year.”
Both companies intend to help bring cryptocurrencies to the mainstream by collaborating with regulators. Such efforts are expected to bring in the next wave of crypto-related services and institutional investors.
Says CFTC Chairman J. Christopher Giancarlo,
“The Commission anticipates new applications for clearinghouse registration resulting from the explosion of interest in cryptocurrencies; an area in which protection of the cryptocurrencies will be one of the highest risks.”