Intercontinental Exchange (ICE), the owner of the New York Stock Exchange (NYSE), has announced that will list a physically-settled bitcoin futures contracts and form a new company whose mission is to make bitcoin a mainstream financial asset.
ICE to Launch Physically-Settled Bitcoin Futures
ICE made the groundbreaking announcement on Friday, revealing that the new platform — Bakkt — has been developed in partnership with a variety of blockbuster names, including Microsoft, Starbucks, and BCG.
Bakkt will integrate with the ICE’s U.S. futures market and clearinghouse to list a physically-settled one-day bitcoin futures product, complete with physical warehousing managed in-house by ICE. This product will launch in November, pending regulatory approval.
Because ICE — one of the biggest names in finance — will serve as custodian for all assets stored on the Bakkt platform, institutional investors such as pensions, endowments, and insurance companies may be less hesitant to take a bet on this burgeoning asset class. As CCN reported, analysts and others with knowledge of the institutional investing landscape had consistently fingered a lack of a respected, regulated custodian as the primary reason that institutions were staying away from bitcoin.
“Bakkt is designed to serve as a scalable on-ramp for institutional, merchant and consumer participation in digital assets by promoting greater efficiency, security and utility,” said Kelly Loeffler, CEO of Bakkt. “We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce.”
However, far from just a bitcoin futures exchange, Bakkt — whose other investors include Microsoft subsidiary M12, Fortress, Susquehanna, Pantera Capital, and Galaxy Digital — is intended to be a full-fledged platform that helps digital assets evolve into a mainstream financial asset class.
“In bringing regulated, connected infrastructure together with institutional and consumer applications for digital assets, we aim to build confidence in the asset class on a global scale, consistent with our track record of bringing transparency and trust to previously unregulated markets,” said Jeffrey C. Sprecher, founder, chairman, and CEO of Intercontinental Exchange.
Indeed, Sprecher and Loeffler lay out their ambitious plans for Bakkt in an interview with Fortune, revealing that the platform will feature its own “omnibus ledger” that operates on top of the Bitcoin blockchain, similar to the Lightning Network (LN).
They said that they envision that, with ICE’s help, bitcoin can become a bona fide currency that could become the asset of choice for international payments.
Once a firm’s assets are custodied with ICE, they will be able to conduct frictionless transactions with other institutions and businesses that are connected to the Bakkt ledger.
”Bitcoin would greatly simplify the movement of global money,” Sprecher told the publication. “It has the potential to become the first worldwide currency.”
Toward that end, Bakkt is exploring how to increase bitcoin’s utility as a payment instrument. The announcement states that Starbucks will take an active role in providing consumers with the ability to seamlessly convert their holdings into USD so that they can use them to pay for items at Starbucks locations.
“As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks,” said Maria Smith, Vice President, Partnerships and Payments for Starbucks. “As a leader in Mobile Pay to our more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for our customers.”
But while ICE believes it can be the one to take bitcoin mainstream, it also says that that reality likely will not resemble the crypto-anarchist vision harbored by many early cryptocurrency adopters.
“Bitcoin can’t survive as a rogue idea,” Sprecher said in the Fortune profile. “To evolve, the cryptocurrencies need to run on established infrastructure. They need the trust and rules that have been built into our financial system for many years. They need the kind of trust that the Big Board represents.”
The bitcoin price saw moderate bump in the hours following the announcement, rising as high as $7,503 on Bitfinex after dipping as far as $7,282 earlier in the day.