Bakkt Crypto Exchange Unveals Product And Service Offering
Bakkt, which launched earlier this month without giving much detail except that it would offer the trading of physical bitcoin futures starting in November, has now given a little insight on what it plans to achieve in the future.
Bakkt is a crypto assets trading platform created by Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, and backed by Microsoft and Starbucks, among others.
In its recent publication, Bakkt announced that the platform will be federally regulated and will offer transparent, efficient price discovery and an institutional quality pre- and post-trade infrastructure.
Bakkt notes that even though “price discovery” might sound bland and boring for something as exciting as cryptocurrencies, it is an essential component for traders.
The publication further states that the platform will offer solid and regulated market infrastructure that would make the crypto asset class more accessible both to institutions and the general public.
“Whether you’re an investment manager seeking federally regulated, institutional trading and security SOLUTIONS or a consumer looking for more choice in transacting, we’re working to make the vision for wider application of digital assets a reality,”
The publication reveals that the project will aim to facilitate institutional investment, providing the much-needed infrastructure for it.
Bakkt will not offer Bitcoin margin trading
According to the official Medium announcement published on August 20, Bakkt — will not support margin trading for its Bitcoin (BTC) contract.
Traders using to leverage the Bakkt solution should know that the buying and selling of Bitcoin will be fully collateralized or pre-funded.
“As such, our new daily Bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset. This supports market integrity and differentiates our effort from existing FUTURES and crypto exchanges which allow for margin, leverage and cash settlement.”
Loeffler claims that by refraining from allowing for margin, leverage and cash settlement –– and offering secure and regulated warehousing, Bakkt will better support market integrity.
Loeffler also believes that this will enable the “trusted price formation” that she considers being key to “advancing the promise of digital currencies.”
The Bakkt solution will offer efficient price discovery which will be bolstered by physical delivery. In other words, actual Bitcoins will be traded on Bakkt, unlike Bitcoin futures available on the market today.
Also, the publication revealed plans to offer a 1-day physically delivered BTC contract by November, subject to pending approval from US regulators.
A need for trusted infrastructure
In the announcement, the CEO of Bakkt Kelly Loeffler outlined what can be referred to as the three cornerstones of the project.
Framework adapted by Bakkt
- Establishing a consistent regulatory construct;
- Providing institutional-grade pre- and post-trade infrastructure; and
- Establishing a transparent, efficient price discovery platform for crypto trading.
Loeffler went on to announce that Bakkt will be essentially different from existing cryptocurrency exchanges because of the physical delivery. She notes that buying and selling of Bitcoin will be fully collateralized or it will be pre-funded.