A fresh statement from Bakkt reveals a substantial new insurance policy for Bitcoin deposits. According to Bakkt, all the Bitcoin in deposit at the Bakkt Warehouse is now under protection by a $125 million insurance. This comes as Bakkt is preparing to launch futures products this month.
Bakkt reveals $125 million insurance for “Bakkt Warehouse” Bitcoin
The institutional Bitcoin futures exchange Bakkt has recently begun to kick into gear. Back on September 6th, Bakkt begun accepting deposits and withdrawals. Furthermore, Bakkt will also start futures products trading on September 23rd.
Nonetheless, Bakkt has had a rough time gaining the appropriate regulatory certifications for its Bitcoin futures project. What separates Bakkt from some other upcoming futures product offerings is that it will have daily and monthly “physically-delivered” Bitcoin futures products.
Even with formal approval now in place, there have been some uncertainties regarding how the platform intends to safeguard users’ Bitcoin.
The need for custodial solutions is one that is growing in the wider crypto industry as well. Furthermore, this is also facing some backlash from crypto supports who argue “Bitcoin is not meant to be stored in a central location”.
However, Bakkt has decided to solve this through placing deposits in a certified “custodial warehousing solution”, dubbed the Bakkt Warehouse.
Is the Bakkt Warehouse insurance enough?
Although the mere existence of the Bakkt Warehouse shows that Bakkt is taking custody seriously, this latest news is even more encouraging. Specifically, Bakkt recently tweeted that Bitcoin deposits at the Bakkt Warehouse are protected by a $125 million insurance policy.
This is an important piece of Bakkt’s puzzle to be able to successfully launch on September 23rd. If it indeed succeeds with its launch, Bakkt will become the first Bitcoin futures platform in the world offering a physically-delivered product.
As such, institutional investors will be able to trade with “actual” Bitcoin. This separates Bakkt from other existing Bitcoin futures products. For example, the futures products from the Chicago Mercantile Exchange settle in cash.
However, Bakkt clients will instead see payment in Bitcoin, once the futures contracts expire. Although the existence of a insurance policy in encouraging, some have however already begun to question it.
Several commentators have raised concerns over whether $125 million will be enough to sufficiently protect all users’ Bitcoin assets. It remains to see how Bakkt counters this criticism.
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Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the cryptocurrency industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.