After months of waiting, Bakkt’s physically settled Bitcoin futures offering is set to go live. The company’s warehouse, which will actually hold customers’ digital assets, began accepting customer deposits on Sept. 6 though, to this day, the company has declined to share how much it has received or the wallet address for its holdings. The platform will enable the physical delivery of Bitcoin with end-to-end regulated markets and custody. It is this regulatory bullet proof offering that is widely expected to provide institutional firms with an extra incentive when considering allocating portfolio funds to the new asset class. However, some of their largest prospective clients still don’t have permission to trade physically-delivered futures contracts. As such, the build it and they will come mantra may not necessarily result in an influx of new, hot money, at least not right away. In fact, only recently, the Cboe BZX Exchange withdrew its VanEck/SolidX bitcoin exchange-traded fund (ETF) proposal. According to a filing dated Sept. 17, a proposed rule change to publicly list shares of the VanEck SolidX Bitcoin Trust was withdrawn on Sept. 13. A decision on the proposal had already been delayed a number of times, and the US Securities and Exchange Commission (SEC) faced a final deadline of Oct. 18 to determine whether to approve or reject what could have been one of the first bitcoin ETFs in the country. In addition to that, despite the price of Bitcoin more than doubling since the beginning of the year, the actual number of firms that trade CME bitcoin
futures contracts has been rather steady and ranged from the low 40s to the low 50s.
This week is also set to mark an important milestone for gold given that European Central Banks have ditched a 20-year-old agreement to coordinate their gold sales, this agreement is set to expire on 26 September 2019. The so-called Central Bank Gold Agreement (CBGA) was originally signed in 1999 to limit gold sales and help stabilize the market for the precious metal. In a statement, the ECB said that the signatories confirm that gold remains an important element of global monetary reserves, as it continues to provide asset diversification benefits, and none of them currently has plans to sell off significant amounts of gold. The deal, originally between 15 central banks, capped the amount signatories could sell each year and, over the subsequent years, prices surged from less than $300 to a high of almost $2,000 in 2011. Now, of course, despite suggesting that there is no desire at the moment to sell significant amounts, only time will tell whether this will be the case, but who could blame them for wanting to capitalize on price appreciation, especially in the face of slowing economic growth and deteriorating finances.
In other news, JPMorgan’s blockchain payments platform has just onboarded its first Singapore-based bank. With the addition of OCBC – the second-largest bank in Southeast Asia by assets – JPMorgan’s Interbank Information Network (IIN) now has around 345 banking members across the globe. Roughly 40% of those are from the Asia-Pacific region.
Elsewhere, CME Group has announced that it will offer options on nju Bitcoin futures contracts starting in the first quarter of next year. The group announced that the launch of Bitcoin options is aimed at providing clients with “additional tools for precision hedging and trading.” The launch is pending regulatory review.
Thank you for reading,
The BeQuant’s Analytics team