Bakkt, the new crypto exchange venture backed by Intercontinental Exchange, the parent of the NYSE, will not allow Bitcoin margin trading on its platform, but instead will assure that each transaction is fully collateralized.
With our solution the buying and selling of bitcoin is fully collateralized or pre-funded.
Our new daily bitcoin contract will not be traded on margin, use leverage or serve to create a paper claim on a real asset.
— Bakkt (@Bakkt) August 20, 2018
According to a recent letter from Bakkt CEO, Kelly Loeffler, the upcoming exchange will adhere to a strict policy of physical delivery. This means that the exchange’s daily Bitcoin contract will not be able to be traded on margin, use leverage, or serve “to create a paper claim on a real asset.”
This supports market integrity and differentiates our effort from existing futures and crypto exchanges which allow for margin, leverage and cash settlement.
Loeffler believes that by eliminating the outcomes often associated with leveraged trading products, the digital asset exchange will provide a trusted infrastructure that is more institution and retail-friendly.
Bakkt will kick-off with a 1-day physically delivered Bitcoin contract along with physical warehousing in November 2018. While the entire operation is still subject to CFTC review and approval, the exchange protocols will be specifically designed to manage security and settlement requirements of digital currencies.
More: An Evolving Market
Photo: Josh Hallet (Flickr)
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.