No, they don't. They need assets equivalent to the USD value of outstanding Bitcoin contracts. This is not an ETF: BTC are not held in trust with shares issued against them.
Again, the proper parallel is CME/COMEX physically-settled gold markets. There are way more gold contracts than gold in their vaults. There are multiple registered "owners" for every physical claim to gold.
If everyone who is long BTC on BAKKT wanted to physically settle, they probably couldn't. The truth is, they probably don't want to. Like the gold markets, the vast majority of market participants are just betting on the price. They don't want to accumulate the underlying.
Which brings us back to why cash-settled futures are perfectly appropriate for institutional exposure to BTC.
Again, the proper parallel is CME/COMEX physically-settled gold markets. There are way more gold contracts than gold in their vaults. There are multiple registered "owners" for every physical claim to gold.
If everyone who is long BTC on BAKKT wanted to physically settle, they probably couldn't. The truth is, they probably don't want to. Like the gold markets, the vast majority of market participants are just betting on the price. They don't want to accumulate the underlying.
Which brings us back to why cash-settled futures are perfectly appropriate for institutional exposure to BTC.
You are just wrong on this point.
I've been around these parts since 2013 and have seen literally 100s of people also wrong about equivalent points in the past.
You need to do more research if you aren't just trolling.
Simple fact: Bakkt will custodian all bitcoins purchased at the end of each day (futures expiration).
the bolded might be the point at issue. you guys are talking about two different things. i'm not sure that he's wrong.
do you actually have proof that all bakkt contracts will be fully collateralized? where is that specified? that's not required by the CFTC as he pointed out with the comex markets.
i'm not sure myself, but i pointed this out in another thread because this "fully backed" talk doesn't seem to be based in fact. i think it's actually a legitimate point of contention:
the contracts are supposed to settle in coins, but some worry that if bakkt is run like the ICE and other wall street exchanges, that this will lead to fractional reserve practices:
Quote
Caitlin Long, who spent more than two decades on Wall Street and co-founded the Wyoming Blockchain Coalition, said that she was partially-pleased by Loefflers post, which answered some questions that she and others had been asking about ICEs handling of bitcoin, specifically about explicit leverage and margin trading.
However, she noted that the post was silent on what she calls hidden leverage, through which institutions commingle and rehypothecate different types of collateral (bitcoins, physical USD, securities, etc.), which involves substituting them for one another on their balance sheet as well as allow multiple parties to declare ownership of the same asset on their financial statements.
These practices, Long says, are standard on Wall Street and could serve to taint bitcoins fixed currency supply with elements of the wider financial system, which relies on fractional-reserve banking.
https://finance.yahoo.com/news/nyse-owner-bitcoin-market-may-205553702.html
However, she noted that the post was silent on what she calls hidden leverage, through which institutions commingle and rehypothecate different types of collateral (bitcoins, physical USD, securities, etc.), which involves substituting them for one another on their balance sheet as well as allow multiple parties to declare ownership of the same asset on their financial statements.
These practices, Long says, are standard on Wall Street and could serve to taint bitcoins fixed currency supply with elements of the wider financial system, which relies on fractional-reserve banking.
https://finance.yahoo.com/news/nyse-owner-bitcoin-market-may-205553702.html
the "simple fact" above doesn't actually speak to the point made about comex gold futures, or to caitlin long's point above. you're talking about the "net" long deliverables, not all outstanding long contracts, which may or may not actually be fully backed.
it's a well known fact that comex gold futures aren't fully backed, even though they are physically deliverable. what makes you so sure that bakkt bitcoin futures would operate differently? it's obviously not required by the CFTC, which is why it's common practice on wall street for firms to "commingle and rehypothecate" different types of collateral for balance sheet purposes.
No, they have clearly said that every contract will be backed by a physical bitcoin in their custodial bitcoin fund. The reason that it is a 1 day futures contract is so they can make sure they acquire the necessary backing bitcoins for each purchase that has not been sold. This information is not hard to find. Long has concerns, that's fine and justifiably so, but her hidden leverage concern is entirely different from the point that I made that is fact.
You are making a second point, but he said "btc are not held in trust." That is not true. They are held.