Bakkt, a company that is working on creating a short-term futures contract for the Bitcoin market explained why Bitcoin (BTC) was their pick for the product they plan on basing their contract on, in a Medium post.
Just a day before, the company announced the launch of their product will be postponed by 4 to 6 weeks. HODLers are eagerly waiting for Bakkt to launch their product which has been now pushed back further. While the delay could make investors even more anxious, it will allow the product to be properly developed.
The company explained their product is being developed in collaboration with the United States Commodity and Futures Trading Commission (CFTC). Since Bitcoin was ruled as being a commodity, the CFTC has the jurisdiction to regulate Bitcoin owing.
According to the Medium post, Bakkt was asked why they decided to start with Bitcoin:
“Bitcoin today accounts for over half of total crypto market capitalization and has been deemed to be a commodity, and its derivatives are regulated in the US by the CFTC…As the world’s most liquid and widely distributed cryptocurrency, and where we’ve seen the most customer demand, Bitcoin’s profile creates a liquid product on which to build a futures contract.”
On top of that, the company declared the CFTC is helping them to perform a “thorough review” of the daily futures contract and warehousing solution. Bakkt admitted their product signifies a “critical shift” in the cryptocurrency market’s evolution.
Bakkt is receiving support from the InterContinental Exchange [ICE], the parent company of the New York Stock Exchange ]NYSE]. This partnership has reached an unprecedented “level of collaboration” between the exchange, customers, and regulatory officials. Bakkt added:
“We are focused on every aspect of delivering an institutional grade crypto warehouse solution and believe this is a significant step in building confidence in this asset class.”
The post also mentioned the prices in the Bitcoin contract which Bakkt says will serve as a price discovery contract because of future markets’ regulation and general transparency.