Bakkt, Intercontinental Exchange’s bitcoin (BTC) futures trading platform, is expected to get regulatory approval, according to the Wall St. Journal.
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The Bakkt futures contract allows investors to bet on the price of bitcoin and will be the first to pay out in bitcoin rather than cash
The contracts are aimed at institutional investors who may have never entered the cryptocurrency sector due to its unregulated nature.
“Once digital assets have more trust and regulation, people will be more comfortable using digital assets as currency,” said Bakkt CEO Kelly Loeffler.
In December 2017, the world’s largest exchange company, CME Group Inc., and Cboe Global Markets Inc., the leading U.S. options exchange, both began trading bitcoin futures when the price of the cryptocurrency was near $20,000.
Today, the price of one bitcoin has dropped by over 80% since, currently trading for $4,123 at press time.
The CME and Cboe contracts are widely viewed as a large step for the budding technology, but those contracts are settled in cash. When a futures contract ends, investors receive U.S. dollars rather than bitcoin.
“It’s great to have cash-settled, but there’s a need for physical delivery” of bitcoin, Loeffler said.
Bakkt is working with a marquee group of organizations including BCG, Microsoft, Starbucks, and others, to create an integrated platform that enables consumers and institutions to buy, sell, store and spend digital assets on a seamless global network.
The effort is designed to address evolving needs in the estimated $270 billion digital asset marketplace.
“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.”
Applications for digital currencies continue to develop alongside regulatory frameworks and rising investment in blockchain technology which has already exceeded all of 2017.
By leveraging trusted market infrastructure, Bakkt is being engineered to help the digital asset markets evolve securely and efficiently while supporting transaction flows.
“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 Loeffler.
“We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce.”
In addition to Intercontinental Exchange and M12, Microsoft’s venture capital arm, investors in Bakkt are expected to include, among others, an affiliate of Fortress Investment Group, Eagle Seven, Galaxy Digital, Horizons Ventures, Alan Howard, Pantera Capital, Protocol Ventures, and Susquehanna International Group, LLP.
“Blockchain technology holds tremendous potential to enable new business models and trusted ecosystems,” said Sean Collins, Senior Partner, BCG.
“By leveraging and developing fundamental market infrastructure, the Bakkt platform will enable firms across industries to accelerate a range of innovation.”