Bakkt was one of the most highly anticipated entries into the world of cryptocurrencies and promised regulated derivatives as well as better institutional participation. Now, after launching a Bitcoin futures contract, the platform wants to introduce Bitcoin options contracts on their Bitcoin futures.
Bitcoin Options Will Be Available in December
According to Bakkt, its Bitcoin options contracts will be available to users starting December 9, 2019. The options contracts are designed for institutional investors looking for Bitcoin exposure or hedging opportunities in a non-correlated asset. All contracts will be settled into the monthly Bitcoin futures on the platform. These futures offerings began in September. Bakkt is associated with the New York Stock Exchange parent Intercontinental Exchange, which makes it uniquely positioned to bring regulated crypto products for larger, institutional investors.
Derivatives Haven’t Caught on in the US
Trading in derivatives products has increased this year. New products, coupled with lowering volatility, have ripened the market. However, trading in derivatives is more popular outside of the US. Foreign platforms are much less regulated than Intercontinental Exchange which gives them easier access to derivatives products than the US. The regulatory environment in the country is strict, and derivatives are supervised by the US Commodities Futures Trading Commission.
Bakkt will have to face its rival exchange CME Group Inc. which will launch Bitcoin options contract in early 2020. With options contracts, users get the right to buy or sell a specific amount of Bitcoin within a specific period. On the other hand, futures contracts create an obligation for the buyer to buy or sell an asset at a specific price on a specific date. Bakkt has already started offering physically settled one-day futures contracts.