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If Bakkt is approved by the US Commodity Futures Trading Commission (CFTC), the proposed Bitcoin futures trading system could contribute to a strong Bitcoin turnaround.
Appeal to Institutional Investors
The venture’s gravitas makes it a potential game changer. As described in a previous post on Bakkt, the venture’s founder, Intercontinental Exchange (ICE), is arguably the world’s most successful operator of financial exchanges. Led by visionary entrepreneur Jeffrey Sprecher, ICE owns The New York Stock Exchange and leading futures exchanges in many major asset categories.
That unique track record seems to appeal to institutional investors, whose fiduciary guidelines typically require investing through government-regulated channels. The lack of US regulatory approval helps explain why many institutions have sat on the crypto sidelines. Bakkt also appeals to some big name financial institutions.
The proposed system “…is the only name we are considering in terms of client funds finding their way into crypto,” observed a trader at JP Morgan Chase in a recent interview.
Since that statement, JP Morgan itself has recently announced the launch of its own centralized cryptocurrency. And that may not preclude JP Morgan from using Bakkt to trade Bitcoin for its own account, or for clients.
Designed to Strengthen Bitcoin Fundamentals
Bakkt is designed not only to facilitate trading, but strengthen Bitcoin’s fundamentals. Partnerships with tech giant Microsoft and retailer Starbucks, according to Bakkt, will help incubate the development of the next generation of convenient applications needed to fuel mass cryptocurrency adoption.
Launch Expected “Later This Year”
The government shutdown and the absence of CFTC regulatory approval have repeatedly postponed Bakkt’s launch. But the venture will likely launch “later this year,” according to Sprecher’s statement during ICE’s February 7th earnings report.
Bakkt claims that the delay of a decision has allowed it to build a formidable base of institutions interested in its services. It’s also raised $182 million for the venture, and has itself invested substantially in the project, estimating its annual costs for Bakkt at over $20 million.
Given the deep experience of ICE, it seems possible that Bakkt could receive US government approval for its venture this year. If so, investors could experience a new level of confidence in the future of Bitcoin and the entire cryptocurrency market.
Brian Sewell is Founder of Zion Trades, www.ziontrades.com, a cryptocurrency trading platform.