Physically-settled Bitcoin futures on the horizon, Bakkt begins user testing

Bakkt began user acceptance testing for its Bitcoin futures contracts today.

Bakkt, a subsidiary of the Intercontinental Exchange, which owns the New York Stock Exchange, announced that it has begun "User acceptance testing" for its Bitcoin futures contracts today.

Futures, derivatives, and synthetics will fundamentally change the nature of the bitcoin market.

There are a number of different firms attempting to create different Bitcoin and Ethereum-related financial products, including Bakkt, Fidelity, the Chicago Mercantile Exchange, Bitwise, VanEck, and a host of other pioneers.

Many of the financial products these firms want to offer are still awaiting regulatory approval from the Commodity Futures Trading Commission or the Securities Exchange Commission.

The CME's futures are paper BTC contracts settled in dollars.

Bakkt is attempting to change that with its flagship product, globally traded futures with physical settlement, meaning futures contracts can be redeemed for the underlying Bitcoin at maturity rather than merely tracking its price.

These contracts from Bakkt and LedgerX may have a greater impact on Bitcoin spot prices than the currently available paper contracts by directly influencing supply.

These contracts may also prove valuable to businesses, such as industrial crypto miners, who need to guarantee the future sale or purchase price of their BTC inventory.

Bakkt's futures will go live once it receives regulatory clearance from the CFTC. Given that LedgerX's physically settled futures were approved in June, it might not be long before Bakkt gets the greenlight.