Bakkt has set another high bar as it lays the groundwork to bring cryptocurrencies to the mainstream. CEO Kelly Loeffler announced in a blog post that the company has hired Coinbase’s employee #5, Adam White, as chief operating officer. He and the founding members scaled Coinbase into the largest cryptocurrency exchange in the US. With its popular app, Coinbase has become the destination for American retail investors who are making a virtual currency trade for the very first time.
Loeffler is counting on White’s expertise to support Bakkt through the same type of mega expansion, exponential growth and branded trust. By May 2018, Coinbase, founded in June 2012, had reached nearly as many customers as Fidelity Investments. With three international offices, including a recent move into Dublin, Ireland, and over 20 million accounts, Coinbase manages roughly twice as many accounts as Charles Schwab, according to a report by the Washington Post.
That’s the kind of growth Loeffler sees for Bakkt. The new venture from the Intercontinental Exchange (ICE) is expected to launch next month, and Loeffler says it will coalesce the fractured state of cryptocurrencies, bringing them into focus for Wall Street. In an interview with Forbes, Loeffler explains that the digital market is “fragmented like the energy market in the early 2000s. ICE was the pioneer attracting more and more institutions to trade energy, which is what created today’s liquid market.”
By offering regulated trading, clearing and custody, and a secured environment where consumers and institutions can seamlessly buy, sell, store and spend digital assets, Loeffler says, “We’re about to see a revolution on the same scale in cryptocurrencies.”
To reach the big pictures, she sees the crypto industry rising alongside a regulatory platform.
“In 2002, Intercontinental Exchange listed only a handful of oil contracts — and today, it offers over 500 oil contracts. At the same time, the oil market went from inconsistent regulation in bilateral, opaque and fragmented OTC trading to a regulated futures market that was transparent and liquid — and many times larger and more useful for commercial hedgers and traders. The market grew alongside the application of regulation. That’s why we believe the sooner a regulatory approach to digital assets is determined, the better positioned we are to support healthy markets and innovation within a dynamic global marketplace.”
White and Loeffler are a formidable team, with his deep experience in the crypto markets and her ties and knowledge of institutional investors and markets. A 16-year veteran at ICE, Loeffler was a member of the executive management team that turned ICE, owner of the New York Stock Exchange, into a Wall Street giant, cementing relationships with the pivotal institutional investors poised to wipe the look of comp sci geeks off the face of cryptocurrencies, and move Bitcoin into American wallets, portfolios and 401(k)s.
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Bakkt’s impact on the psychological barriers for Bitcoin stand to be enormous, particularly if it can deliver on the promise of a smooth onboarding process and simple day-to-day management of cryptocurrencies. With a launch in November, it targets December for institutions to access services on the ICE Futures US commodities exchanges, pending approval by the Commodity Futures Trading Commission (CFTC).
According to Loeffler,
“Our exchange and clearing house boards – and the clearing house risk committee – have all reviewed and approved the respective rules. We plan to file these rules publicly with the CFTC for review and comment very soon. We’re taking a transparent approach to engage across the industry as we begin testing and onboarding in November, and trading and warehousing in December, subject to CFTC approval.”
With a long lens on the turbulent nature of financial markets, Loeffler dismisses Bitcoin’s nascent phase along with the rough price action that has caused the world’s top 10 cryptocurrencies to slide by 80% since January 2018. By comparison, the Nasdaq Composite Index plunged 78% when it fell from 5046.86 to 1114.11 following the burst of the dot-com bubble in 2000.
