The Intercontinental Exchange (ICE), owner of the New York Stock Exchange (NYSE) and numerous other major exchanges around the world, is launching a cryptocurrency exchange named Bakkt. Its CEO, Kelly Loeffler, has revealed some details about Bakkt’s mission and protocol in a Medium post.
Loeffler says Bakkt is “a new company designed to bring digital assets to the mainstream and help unlock the potential of this important technology” and that it is “working to make the vision for wider application of digital assets a reality”.
According to Loeffler, the exchange developed out of a need for investors to have a safe and regulated way to trade, store, and spend cryptocurrency. Bakkt will have institutional grade infrastructure. Conditions are particularly ripe for Bakkt since its development is being orchestrated by ICE, the worldwide leader in stock and futures trading. ICE has the expertise and potential to launch every type of Bitcoin investment product possible in the future via Bakkt. They are starting with physical Bitcoin futures, which is a major development.
Currently, there are Bitcoin futures on CME and CBOE, but these are cash settled so they don’t directly impact Bitcoin’s global spot markets or price. The futures on Bakkt will be settled for physical Bitcoins every day, so they will have a direct impact on global Bitcoin price, and provide a channel for institutional investment to pour into Bitcoin.
Loeffler says one of the primary goals of Bakkt is to facilitate Bitcoin price discovery and it are doing this by ensuring that every physical Bitcoin futures contract has Bitcoin backing it. It does not want to issue any paper Bitcoins, since that would dampen Bitcoin’s price, so Bakkt will not have any leverage.
Looking at this a bit more broadly, Bakkt’s CEO is saying that it expect so much volume on Bakkt that it will determine global Bitcoin price. This is quite possible, since this is basically ICE’s answer to Bitcoin trading, and it could end up being the biggest crypto exchange in history. Physical Bitcoin futures are projected to be launched in November 2018, which could cause a major Bitcoin rally.
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