Bakkt has launched 2 new trading products, and it sheds light on the firm's 2020 vision

Quick Take

  • Bakkt announced the launch of 2 new trading products on Monday
  • It shows that the exchange is looking to model itself after its parent company, the Intercontinental Exchange (ICE)
  • We’re using a similar playbook to expand our suite of products at Bakkt,” the exchange said.

It's not yet clear who will lead Bakkt going into 2020, but the firm's product roadmap for the new year is somewhat apparent. 

As per a blog post announcing the launch of two new contracts, the Intercontinental Exchange-backed firm said it's looking to model itself after its parent company by offering a suite of digital currency products that mirror the popular Brent Crude Oil Futures contract. The blog comes a week after Bakkt's CEO Kelly Loeffler was tapped to take over a vacant U.S. Senate seat in Georgia. 

Bakkt, which launched its market for physically delivered bitcoin futures in September, said its family of trading products will build on top of the one-month contract. Options, tied to its bitcoin futures, were announced in October and got launched today. Cash-settled futures tied to Bakkt's first contract also began trading today in Singapore. At last check, over 1,200 lots were trading in the new contract.

ICE, by way of comparison, has launched several oil derivatives leveraging its benchmark crude oil future. 

"We’re using a similar playbook to expand our suite of products at Bakkt," the company said.  "By starting with the physically delivered Bakkt Bitcoin (USD) Monthly Futures, we have a benchmark contract which provides the foundation for us to develop complementary products based on the needs of our customers."

In November, Bakkt announced it would launch cash-settled futures for trading on ICE Futures Singapore, which is regulated by the Monetary Authority of Singapore. It marks the first instance of a regulated US-based exchange breaking into the booming Asian derivatives market. It also shows Bakkt isn't married to the physically-delivered set-up, which it helped pioneer in the digital assets market. With cash-settled contracts, traders don't have the option to take physical delivery of an asset at the point of expiry.

Bakkt now also hints at the future launch of new derivatives products. 


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Mind the gap

Thus far, traders haven't seemed too keen on taking physical delivery of their coins, as recently noted by economist Alex Kruger

Rival CME Group, launched its cash-settled contract for bitcoin futures in 2017. It offers the largest regulated cash-settled futures market for bitcoin. Still, Bakkt's set-up could offer some advantages. While CME's futures trades are based on the pricing of an underlying index comprised of spot cryptocurrency exchanges, Bakkt's is based on its underlying future. That could better maintain the price integrity of the contract relative to CME, which is known for its price gaps

Launching the contract in Asia also puts Bakkt up against firms like CoinFLEX and FTX, new derivatives entrants that have seen success with a diversity of assets and high leverage. For now, unregulated markets reign supreme in Asian crypto trading, but the potential of a regulatory crackdown is something some insiders see on the horizon, in the very long-term. That could be a tailwind for Bakkt. 

In addition to its trading contracts, Bakkt continues to expand its custody offering and consumer-facing app going into 2020, according to the blog. 

As for the firm's next CEO, that doesn't appear to be settled. 

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Frank Chaparro is the Editor At Large at The Block. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. He runs his own podcast The Scoop and writes a biweekly eponymous newsletter. He leads special projects, including The Block's flagship podcast, The Scoop. Prior to The Block, he held roles at Business Insider, NPR, and Nasdaq. For inquiries or tips, email [email protected].