Wall St. to Washington: Bakkt Launches New Products, CEO Joins Senate

Earlier this week, institutional Bitcoin futures platform Bakkt launched two new financial products: the first United States-regulated BTC options and cash-settled futures.

What is Bakkt? Bakkt is a digital assets platform created by the Intercontinental Exchange, or ICE, an Atlanta-based operator of 23 major international exchanges that include the New York Stock Exchange, the world's largest exchange.

Futures represent an agreement to buy or sell an asset on a specific future date at a specific price - an important risk management tool for volatile markets such as crypto.

In the accompanying press release, the company's Chief Operating Officer Adam White argued that the physical Bakkt Bitcoin Monthly Futures that were launched back in September produce a benchmark contract that "Provides the foundation for us to develop complementary products based on the needs of our customers." He added that the options contracts will comprise of capital efficiency, cash or physical settlement, low fees and European-style options.

New options: What's on offer to investors?Indeed, on Dec. 9, Bakkt unveiled two new Bitcoin investment products: Bakkt Bitcoin Monthly Options and Bakkt Bitcoin Cash-Settled Futures.

According to the platform, the monthly options product is the first Bitcoin futures contract regulated by the U.S. Commodity Futures Trading Commission.

The cash-settled futures product, in turn, is a new contract that will be initially available on ICE Futures Singapore, an approved exchange located in the island city-state.

The contract is based on the settlement price of the benchmark Bakkt Bitcoin monthly future contract and provides an "Alternative for participants who are unable to trade our physically delivered contract," the blog post reads.

"Over time it's likely to be institutions like the CME and Bakkt that are needed to create the necessary infrastructure to attract institutional investors to Bitcoin and cryptocurrencies. But they are not, by themselves, enough. Reason: The biggest struggle for Bitcoin futures has been lack of liquidity. Without liquidity, demand for crypto assets from institutions will continue constrained, at least in the near term."

"While Bakkt would have an initial advantage, the CME maintains a stronger presence in the derivatives market and so institutional traders and investors are already very comfortable with their platform. Currently, Bakkt's bitcoin futures product does around 10% of the daily notional trading volume that the CME's bitcoin futures product does. As such, the CME remains the higher volume platform and I would expect this to continue as similar bitcoin products launch."