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Bakkt set to launch long-awaited bitcoin futures in September

Bakkt LLC is finally gearing up to launch its long-awaited bitcoin futures product after clearing a key regulatory hurdle.

On Aug. 16, the Intercontinental Exchange Inc.-owned digital assets trading and conversation company was granted a charter from the New York Department of Financial Services to create Bakkt Trust Co., a custodian. The company said the Bakkt Warehouse will provide custody services for the physically delivered bitcoin futures. Now, with the charter secured, Bakkt plans to launch its physically delivered daily and monthly bitcoin futures contracts Sept. 23.

"This offers customers unprecedented regulatory clarity and security alongside a regulated, globally accessible exchange in a market underserved by institutional-grade infrastructure," the company said in a Medium post.

Bakkt's bitcoin futures will trade on ICE Futures U.S. and clear on ICE Clear U.S., which are both regulated by the U.S. Commodity Futures Trading Commission. Bakkt's bitcoin futures previously received sign-off from the CFTC, which is the leading derivatives regulator in the U.S.

Other companies that have launched bitcoin futures trading include Cboe Global Markets Inc. and CME Group Inc., with both of them rolling out their offerings in December 2017. Interactive Brokers Group Inc. has also begun to offer Bitcoin futures trading to clients following Cboe's launch.

Cboe in March said it will not add new futures contracts in its trading platform, saying it plans to assess how it will continue to offer digital asset derivatives.

Various experts have praised Cboe and CME's product launch, saying volatility in the underlying asset would decline due to increased liquidity and the price stabilizing due to market-making activity and that having a bitcoin futures market provides the cryptocurrency space with a "more mature asset class." They also said the CFTC approving bitcoin futures contracts could pave the way for the Securities and Exchange Commission to approve bitcoin exchange-traded funds.

However, the SEC has repeatedly deferred action on whether to approve Bitwise Bitcoin ETF Trust and VanEck SolidX Bitcoin Trust's applications.

The CFTC also reportedly told a senior official it could approve an ether futures contract if it "ticks all the right boxes," but the official clarified that the regulator will only give its decision based on a specific application and not give a general opinion. If an approval is secured, ether would be the second cryptocurrency to be available in the futures trading market.