NYSE Owner Launches Crypto Startup

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NYSE Owner Launches Crypto Startup

The big daddy of trading exchanges is entering the bitcoin market.

Intercontinental Exchange (ICE) of London has announced the creation of Bakkt (pronounced “Backed”), a business that will create a trading platform and infrastructure for cryptocurrency trading. For the venture, ICE has worked with the Boston Consulting Group (BCG), Microsoft Corp. (MSFT), and Starbucks Corporation (SBUX), as well as numerous significant participants in the crypto ecosystem, including Pantera Capital and Susquehanna International Group. ICE is “trying to establish an integrated platform that allows individuals and institutions to purchase, trade, store, and spend digital assets over a seamless worldwide network,” according to a news statement. “Federally regulated markets and warehouses, as well as merchant and consumer applications, are planned to be part of the Bakkt ecosystem.”

Bakkt’s first order of business will be to offer a futures contract with 1-day physical delivery of bitcoin in November, pending permission from the Commodity Futures Trading Commission (CFTC). According to the ICE news release, “these regulated venues will develop new rules for addressing the special security and settlement needs of digital currencies.” “Additionally, the clearing house intends to establish a separate guarantee fund, which will be financed by Bakkt.” For trading, the contract will make use of Microsoft’s cloud service. Bitcoin futures contracts on the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (Cboe) are cash-settled and do not need actual delivery of bitcoin. They are based on the price of the coin on the underlying trading markets. (See also: Why Bitcoin Futures Are About To Change.)

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Starbucks’ inclusion on the list of firms collaborating in the campaign fueled anticipation that it might begin accepting bitcoin as payment for merchandise at its cafés. However, in a response to Vice site Motherboard, the business denied the reports. According to the startup, Bakkt’s technology “will transform digital assets such as Bitcoin into US dollars that can be utilized at Starbucks.”

What Does ICE’s Entry Into Bitcoin Trading Mean For Crypto Ecosystem?

The introduction of ICE has various advantages for bitcoin trading.

The most important is size. ICE is a monster of sorts, owning various trading platforms throughout the globe. It has unrivaled clout and reach among exchanges, and its presence signals a surge in institutional investor interest in bitcoin trading. Coinbase Vice President Adam White told Fortune that there was at least $10 billion in institutional money waiting for bitcoin trading. The ICE platform will serve as a barrier for institutional money to access this market. The introduction of physical delivery also indicates the development of bitcoin custody solutions. Several firms and cryptocurrency ecosystem stakeholders, including Coinbase and Goldman Sachs (GS), have recently developed or announced intentions for bitcoin custody solutions. (See also: Coinbase Attempts to Attract Institutional Investors.)

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