This week, Bakkt exchange for institutional Bitcoin (BTC) futures launched two new financial products, as their CEO enters the US Senate. The first product is a United States-regulated BTC options and cash-settled futures, which is the first of its kind. The announcement came just three months after the project went public with its physically delivered futures, after several delays.

Meanwhile Kelly Loeffler, the CEO of Bakkt, is reportedly going to replace Georgia Senator Johnny Isakson in the U.S. Senate this year. What could these new developments mean for Bakkt and the entire cryptocurrency?



New investment options offered to investors

On December 9th, Bakkt revealed their two newest Bitcoin investment products.. These products are: Bakkt Bitcoin (USD) Monthly Options and Bakkt Bitcoin (USD) Cash-Settled Futures. According to the platform, their monthly options product is the first Bitcoin futures contract to be regulated. This news comes after receiving regulatory approval from the U.S. Commodity Futures Trading Commission. The announcement stated:

“Cash settled futures products simply net the difference at expiry with one party receiving that cash difference,” as John Todaro, director of digital currency research at TradeBlock — a New York-based data provider — told Cointelegraph, elaborating:

“In this way, cash settled futures are often seen as simpler instruments, mostly for speculative purposes, have less delivery costs/warehousing costs associated with them, but in some cases may not be seen as the best instrument for parties that actually need the physical asset for hedging or other (like a bitcoin miner for instance may need to deliver the physical bitcoin). In both cases, futures contracts require the two parties to transact at a certain price at a future date.”

The cash-settled futures is a new product, offering contracts that will be initially available on ICE Futures Singapore. The contracts are based on the settlement price of the benchmark Bakkt Bitcoin monthly future contract. Thus providing an “alternative for participants who are unable to trade our physically delivered contract,”

“Options are similar to futures in that they are derivative contracts, but they have more nuance to them (a whole host of strategies can be built on calls and puts) and do not require the two parties to transact. A buyer has the right (the option) to transact but not the obligation to do so. The reason the buyer may not want to exercise the contract is if the price is no longer in his/her favor — however this person is paying a premium for this right.”

Attracting more institutional investors

Juan M. Villaverde, chief crypto analyst at Weiss Ratings spoke on the subject of attracting more institutional investments, stating:

“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.”

Todaro continued by saying:

“That’s good for long-term individual investors and commercial players. But it may not get a resounding cheer from crypto traders who are attracted to crypto assets precisely because of their high volatility.”

Although it’s important to note that Todaro is also skeptical in this regard. In his opinion the new financial products might cause more bear action in the market. Rather than the flood of investments into the top cryptocurrency people are hoping for.

“While an increase in bitcoin product offerings would bring about greater institutional involvement in the space, it is not exactly clear that these institutions would be buyers of the asset class.”

Is Bakkt’s CEO in the U.S. Senate good for crypto?

Bakkt has hinted they may make more official announcements before the year is over. The Washington Post reported that Georgia Governor Brian Kemp has appointed Kelly Loeffler to the U.S. Senate. Meaning the Bakkt CEO will be replacing Sen. Johnny Isakson (R-GA). As he has been planning to retire by the end of the year.

As a result of her new position, Loeffler will be stepping down from her role as CEO at the digital assets platform. Bakkt has made a statement thanking Loeffler for her work with Bakkt.

Loeffler’s entry to the political scene is viewed by many as a positive sign for the cryptocurrency industry as a whole. Todaro stated on the subject:

“Kelly Loeffler obviously understands the space and is a proponent of it, and so, where applicable on matters before her in the Senate, I would imagine she would be a proponent of bitcoin and other digital currency platforms.”Bakkt intends to conduct its crypto expansion into the mainstream in 2020. They plan to release a consumer app developed in partnership with the huge international retailer Starbucks. According to Bakks, this app will enable consumers to “unlock the value of digital assets, as well as ways in which they can transact or track them.”