The cryptocurrency industry took a significant step toward mainstream institutional adoption on August 29, 2019, as Bakkt — the digital asset platform backed by the Intercontinental Exchange (ICE) — announced it would begin accepting Bitcoin deposits for custody on September 6. The move sets the stage for the long-anticipated launch of physically delivered Bitcoin futures contracts on September 23.
TL;DR
- Bakkt will open its Bitcoin custody warehouse on September 6, 2019
- Physically delivered Bitcoin Daily and Monthly Futures launch September 23
- Bakkt Trust Company LLC approved by New York Department of Financial Services as qualified custodian
- Contracts will be traded on ICE Futures U.S. and cleared through ICE Clear U.S.
- Both venues are federally regulated by the CFTC
Bakkt’s Custody Warehouse Opens Its Doors
In a widely noticed announcement on Wednesday, August 28, Bakkt revealed the timeline for its custody solution, which has been one of the most closely watched developments in the crypto industry throughout 2019. The company tweeted that its warehouse would begin offering secure storage of customer Bitcoin starting September 6, directly preparing for the launch of Bakkt Bitcoin Daily and Monthly Futures on September 23.
The announcement marks a crucial milestone for Bakkt, which has been working through regulatory approvals for over a year. The platform’s futures contracts will enable physical delivery of Bitcoin — a feature that distinguishes them from the cash-settled Bitcoin futures already trading on the CME. According to Bakkt, the contracts will operate with end-to-end regulated markets and custody.
Institutional-Grade Infrastructure Takes Shape
Bakkt’s Bitcoin futures will be exchange-traded on ICE Futures U.S. and cleared through ICE Clear U.S., both of which operate under federal regulation by the U.S. Commodity Futures Trading Commission (CFTC). This dual-layer of regulatory oversight addresses one of the key concerns that has kept institutional investors on the sidelines of the crypto market.
For custody purposes, Bakkt secured approval from the New York Department of Financial Services to establish Bakkt Trust Company LLC, a qualified custodian that will oversee the Bakkt Warehouse. This regulatory green light from New York’s financial watchdog adds another layer of credibility to the platform’s infrastructure.
Bridging the Institutional Gap
Bakkt CEO Kelly Loeffler emphasized that the platform is designed to address the specific needs of institutional participants, who have been underserved by existing crypto market infrastructure. In her statement, Loeffler noted that digital asset markets have become global and well-developed but have largely been designed for retail customers rather than institutional players.
“Whether concerns relate to a lack of liquidity, market quality and regulation, or issues with reliability, fees, and operational risks, we are addressing these challenges with a transparent offering,” Loeffler stated. The platform aims to provide what Loeffler described as “unprecedented regulatory clarity and security” alongside a regulated, globally accessible exchange.
Market Context
The Bakkt announcement came at a time when Bitcoin was trading around $9,510, down roughly 2.4% over 24 hours and approximately 4.8% for the month of August, according to data from CoinMarketCap. Despite the short-term price weakness, the broader narrative of institutional infrastructure development continued to progress, with Bakkt’s launch representing one of the most significant milestones in that journey.
Ethereum was trading at $169.52, while the total cryptocurrency market capitalization stood at approximately $261 billion. The top five cryptocurrencies by market cap — Bitcoin, Ethereum, XRP, Bitcoin Cash, and Litecoin — were all posting losses for the day, reflecting the broader market correction underway during late August 2019.
Why This Matters
Bakkt’s physically delivered Bitcoin futures represented a paradigm shift in how institutional investors could gain exposure to Bitcoin. Unlike cash-settled alternatives, physical delivery means actual Bitcoin changes hands, creating direct demand for the underlying asset. The ICE backing, CFTC regulation, and New York-approved custody solution combined to create an institutional-grade on-ramp that had never existed before in the cryptocurrency market. The September 2019 launch would eventually prove to be one of the foundational building blocks for the institutional Bitcoin adoption wave that accelerated in subsequent years.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always do your own research before making investment decisions.