Chain Financial News, in accordance with Bakkt's plan for June this year, Bakkt will enter the actual operation phase of the “Acceptance and Transaction User Acceptance Test” for physical settlement of Bitcoin futures products today (July 22). It is understood that so far, no company has actually launched bitcoin futures settled in kind. At present, the bitcoin futures of CME and CBOE of the two major US exchanges are settled in cash.
According to the chain of financial understanding, Bakkt's physical delivery bitcoin futures were planned to be listed in December 2018, but the reasons for the lack of regulatory approval for its hosting plan have been postponed.
Due to the physical delivery of Bakkt's bitcoin futures, in order to regulate the delivery of futures contracts, the custody scheme became a key factor in whether the US Commodity Futures Trading Commission (CFTC) approved its listing.
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In order to comply with regulatory requirements, in January of this year, Bakkt launched a delivery warehouse (“Bakkt Warehouse”) and proposed BitLicense (Digital Currency License) to the New York State Department of Financial Services (NYSDFS) in April this year. The application for the certificate, as the main compliance program for obtaining the identity of the qualified custodian as its own delivery warehouse. According to Bloomberg's previous report, people familiar with the matter said that the CFTC recognizes the national bank and trust licenses. If ICE obtains permission from the New York Financial Services Authority to hold tokens, it can allow ICE to list futures through self-certification procedures.
At present, although ICE has submitted an application for physical settlement of bitcoin futures to CFTC, the Bakkt futures contract does not qualify for the CFTC's Self-Certification Rule because it has not obtained the status of a qualified custodian.
It is not easy for Bakkt to launch the first physical bitcoin futures contract on the market. In addition to the “rigid” regulatory requirements, Bakkt also faces competition from the US derivatives trading platform LedgerX.
On June 25, the CFTC official website information showed that the CFTC has approved LedgerX's Designated Contract Market (DCM) license application, which allows LedgerX to allow online physical contract delivery of bitcoin futures contracts.
The LedgerX is registered as a designated contract market (DCM) based on Section 5 of the Commodity Exchange Act (CEA) and Part 38 of the CFTC Regulation. After registration as DCM, LedgerX will be required to continue. Comply with all applicable provisions of the CEA and CFTC regulations, including Part 38 of the CFTC Regulations. Also, LedgerX has asked the CFTC to modify its registration request to DCO, which limits LedgerX to clearing swaps to allow it to liquidate futures listed on DCM.
It is understood that after obtaining the CFTC's DCM license, LedgerX has obtained all the qualifications including the introduction of futures products, trading and liquidation, and thus has the qualification to enter the CFTC self-certification, and once LedgerX completes the CFTC self-nuclear Proof, then the physical delivery bitcoin futures that have been waiting for a long time will finally be online.
Moreover, LedgerX registered the Swap Execution Facility (SEF) Licensing and Derivatives Clearing Organization (DCO) certification in the CFTC as early as July 2017. LedgerX has previously qualified to provide swap contracts and options contracts for customers.
LedgerX, who is already qualified to enter the CFTC self-certification, is clearly more "successful" than Bakkt is still waiting for a qualified custodian.
However, some industry insiders have analyzed that although LedgerX got the regulatory approval earlier, LedgerX's resources are not as good as Bakkt.
According to public information, Bakkt is a digital currency trading platform established by the parent company ICE of the New York Stock Exchange under the support of BCG, Microsoft and Starbucks. Possible investors include M12, Microsoft's VC division, GalaxyDigital, Horizons Ventures, AlanHoward and Pantera Capital.