Intercontinental Exchange Inc (ICE) is known around the world as the parent company of the New York Stock Exchange. It seems owning the largest stock exchange in the world isn’t enough for ICE, which has not set its sights on Bitcoin in what could be a watershed moment for digital currencies. So it might just be the perfect time to buy Bitcoin before something immense happens that will change the Bitcoin trading landscape forever.
Federal regulators not keen
ICE has ambitious plans to turn Bitcoin into a mainstream asset. The game plan of the company is to create a highly regulated environment around Bitcoin so that the largest scale of institutional investors (pension funds, insurance companies, and endowments) start to take Bitcoin seriously as an investment. However, federal regulators are resisting this plan, so ICE has turned to state regulators to try and push the idea over the finish line.
The venture for the ICE Project, called Bakkt, was released in August and was met with lots of enthusiasm in the crypto community. The launch date, however, keeps getting delayed by months at a time. The Commodity Futures Trading Commission (CFTC), which is the US regulator responsible for Bitcoin futures, is skeptical of the project due to concerns over how the clients token will be stored. The safety and security of the tokens are important to the CFTC not just in case of theft, but also to secure against manipulation.
In an effort to assuage the CFTC’s worries, ICE is looking to New York financial regulators to issue Bakkt with permission to have custody of customers’ tokens. These are just whispered around the community as no sources have been willing to speak due to the sensitive nature of the talks. The state license would be good, but it would still need the CFTC to sign off on the larger part of its project.
The difference in approach is brave
The difference between Bakkt Bitcoin futures and the futures that are already offered by CME and CBOE Global Markets is groundbreaking. Bakkt’s one-day contracts would pay out in Bitcoin tokens, not in US Dollars. To many who have been involved in Bitcoin fro the early days, this is immense news.
While institutional investors have used Bitcoin futures before, they have never bought Bitcoin itself. They did not have trust for the platforms that held Bitcoin, and even in the current crypto market, there is a bit of the old Wild West attitude. This was a no go for traditionally conservative and risk-averse institutions. However, Bakkt would come with the pedigree of ICE and long tradition in Wall Street. This automatically lends an air of trust with which no other startup could compete.
It would also allow for retailers such as Starbucks, already announced as partner of Bakkt, to accept Bitcoin and convert it easily into dollars. It is easy to see that ICE’s end goal is to be a one-stop shop for both consumers and institutions to buy, sell, store and spend digital assets. Combined with a global network that works properly, they could become a behemoth the likes of which no one has ever seen before.
That is exactly why the CFTC sees Bakkt as far more complicated than the CME/CBOE listings. While ICE has much bigger ambitions, it is being forced to pay for those ambitions by having to do exponentially more work.