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Crypto focused platform Bakkt is poised to launch its services in the third quarter of this year, according to The Block citing sources with knowledge about the matter.
The news outlet said it has obtained a copy of a slide-deck indicating that the Intercontinental Exchange-backed company still needs the approval of the New York Department of Financial Services (NYDFS) to operate its warehousing service, called Bakkt Warehouse.
As per the report, gaining approval from the NYDFS would allow Bakkt to operate as a limited-purpose firm. However, the insiders noted there is no guarantee the firm will follow the deadline.
“The future is different from the warehouse, but the product depends on the warehouse,” an unnamed source said.
However, while Bakkt is finally near to launching its platform, the report cited multiple industry sources saying there are some issues that might get in the way.
The sources said the company’s move is too risky, noting that the guaranty fund set by the company is too small to cover positions at risk. ICE will only reportedly contribute $35 million to start the fund for losses related to bitcoin contracts.
Putting things in perspective, Altonomy Co-Founder Ricky Lo pointed out that $35 million guaranty fund is relatively too small to the size of Bakkt funds, which would have approximately $400 million in open positions at risk.
Fortunately, Bakkt itself acknowledged the risk and said it has plans to raise the sum of the guaranty fund after the launch.
But overall, most sources considered the plan as “good enough.”
As previously reported, Bakkt has started user acceptance testing for bitcoin daily and monthly futures. Based on its ICE Futures U.S. filing with the CFTC, the contracts will be physically settled, which means “that the selling Clearing member would be required at settlement to deliver to the buying Clearing member a specified quantity of Bitcoin.”
The contracts are the first of its kind in the regulated bitcoin market as futures from Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) are settled in cash.
