Bakkt is eyeing a launch in Q3, but part of its plan is risky, sources say

Quick Take

  • Bakkt is eyeing a Q3 launch pending approval from the NYDFS, according to sources close to the situation
  • A leaked version of the exchange’s initial plans shows a guaranty fund that some say is too low to cover positions at risk

Bakkt is gearing up to announce a Q3 launch date, a source close to the upcoming exchange has told The Block, but leaked plans about its initial product structure have raised questions.

As per a slide-deck obtained by The Block, the Intercontinental Exchange-backed project is still waiting on approval from the New York Department of Financial Services to operate its so-called Bakkt Warehouse, which would allow Bakkt to operate as a limited-purpose trust company. 

Bakkt Warehouse, if approved, would serve as a qualified custodian for the bitcoin that underpins its physically delivered futures. 

"The future is different from the warehouse, but the product depends on the warehouse," a trading executive, who requested anonymity, told The Block in a message. 

In May, Bakkt said it would not launch its one-day contract and monthly contract until it the firm acquires its trust.

The company claims it has provided the regulated infrastructure for traders to deliver and receive bitcoin for dollars in standardized settlement cycles. The futures contracts will be cleared by ICE Clear U.S., and will be compliant with CFTC regulations.

"Bakkt’s infrastructure creates the first end-to-end regulated environment for traders to deliver and receive bitcoin in exchange for USD in standardized settlement cycles," the document read.

Product plan under scrutiny

An early launch will come as good news to clients out of state, but multiple industry sources who have s