Good News About Bakkt’s Bitcoin Issues. Bloomberg reports

Bakkt Has Issues That A N.Y. Crypto License Might Get It Fix

Bloomberg is reporting that, Intercontinental Exchange Inc. has been facing resistance from federal regulators on their plan to bring Bitcoin to the masses. Now, the owner of the New York Stock Exchange is turning to state watchdogs to get the project over the goal line.

The launch date for the project — known as Bakkt — has been delayed for months because of skepticism from the Commodity Futures Trading Commission, the U.S. regulator that polices Bitcoin futures. The issue that that has made the CFTC the most concerned is how clients’ tokens will be stored, and thus safeguarded from possible theft and manipulation, according to people familiar with the matter.

To placate the agency, ICE is considering seeking a license from New York financial regulators that would permit Bakkt itself to hold custody of customers’ tokens, said three of the people, who asked not to be named because the discussions aren’t public. Should ICE secure a state license it would still need sign-off from the CFTC on the broader Bakkt project.

Atlanta-based ICE is trying to attract institutional investors by providing Bitcoin futures that differ in a crucial way from derivatives already offered by CME Group Inc. and Cboe Global Markets Inc.: When Bakkt’s one-day contracts expire they would pay out in Bitcoin tokens instead of U.S. dollars.

The reason why that’s important is that institutions have been hesitant to buy Bitcoin on the unregulated platforms where it’s now mostly sold — the Wild West that dominates the crypto market. So having a futures contract overseen by ICE that delivers Bitcoin would potentially give mutual funds and endowments a more secure way to obtain tokens.

Bakkt would also facilitate retail transactions by providing Starbucks and other businesses a platform to easily convert Bitcoin into dollars. Combined, the features are central to ICE’s plan to enable “consumers and institutions to buy, sell, store and spend digital assets on a seamless global network.”

“While we’re not yet able to provide a launch date, we’re making solid progress in bringing the first physical delivery price discovery contracts for Bitcoin to the U.S., where price formation will occur in federally regulated, transparent markets,” Loeffler said in the Medium post.

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Mohsen Daemi
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