- The Intercontinental Exchange (ICE) has announced the launch of cash settled Bitcoin Futures contracts for December 09, 2019.
- The Bakkt Bitcoin (USD) Cash Settled Monthly Futures contracts are listed on ICE Futures Singapore and have been approved by the Monetary Authority of Singapore (MAS).
After the Intercontinental Exchange (ICE) introduced the first Bitcoin Futures contracts physically settled by Bitcoin via Bakkt at the end of September, the exchange will now also offer BTC Futures contracts settled in cash. In a press release issued today, ICE, the operator of the New York Stock Exchange, announced that the launch is scheduled for December 9, 2019.
The Bakkt Bitcoin (USD) Cash Settled Monthly Futures contract will be listed on ICE Futures Singapore and regulated by the Monetary Authority of Singapore (MAS). This is in light of MAS’s new consultation paper of last Wednesday, which allows Bitcoin and other cryptocurrencies to be traded on exchanges approved by the central bank, including the ICE.
The cash settled contracts will be settled with data from the physically delivered Bakkt Bitcoin Monthly Futures contract from Bakkt. The contracts are denominated in US dollars and can be traded by all investors worldwide. Lucas Schmeddes, President & COO of ICE Futures and Clear Singapore said in the press release:
Our new cash settled futures contract will offer investors in Asia and around the world a convenient, capital efficient way to gain or hedge exposure in bitcoin markets. Building off the success of our deliverable futures contract, the cash settled futures will leverage ICE’s regulated, globally-accessible market to offer a safe, secure and compliant environment for the trading of Bitcoin.
Futures contracts settled in cash (US dollars) offer a number of advantages for investors that ICE wants to offer its customers. They avoid the need to hold BTC, which Bakkt does for its physical covered BTC futures for its clients through Bakkt Custody. However, with the cash settled contracts, there are no possible problems with the origin of the Bitcoin (BTC).
Critical voices from the crypto industry
However, Bakkt will not discontinue its physically settled Bitcoin futures, but will continue to offer them. The demand for the physically settled Bakkt futures has risen slowly but steadily in the last few months and shows a volatile but daily interest in the contracts.
Daily summary of Thursday's Bakkt Bitcoin Monthly Futures:
📈 Traded contracts: 1648 ($12.41 million, +10%)
🚀 All time high: 1756 (11/8/2019)
💰 Open interest: $1.36 million ()
— Bakkt Volume Bot (@BakktBot) November 22, 2019
While the physical contracts delivered by Bakkt were unanimously welcomed by the crypto community as a milestone, the cash settled futures are viewed very critically by the crypto community. The monthly expiring Bitcoin futures on the Chicago Mercantile Exchange (CME) are suspected of significantly influencing or manipulating the Bitcoin spot price.
Arcane Research published a study in mid-October which confirmed this suspicion. Of the first 20 months in which the CME Bitcoin futures were issued, Bitcoin lost value in 15 out of 20 cases (75 percent) approximately 1.5 days before expiration.
Christopher Giancarlo, former chairman of the U.S. Commodity Futures Trading Commission (CFTC), also confirmed the influence of cash-based Bitcoin futures on the crypto currency market. Giancarlo explained that the Trump administration has approved the cash-based Bitcoin futures on the CME and Chicago Board Options Exchange (CBOE) to pop the 2017 Bitcoin bubble.
It remains to be seen what impact the Bakkt Cash Settled Futures will have on the Bitcoin price and how they will affect the physically covered BTC futures.
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