What is Bakkt Exchange?


Bakkt is a global regulated ecosystem for digital assets created by ICE(Intercontinental Exchange not to be confused with America’s immigration agency), and is also a parent company of New York’s stock exchange(NYSE).

ICE is the second largest owner of financial exchange by worldwide revenues, and they are leaders in futures and commodities(sugar, cotton, coffee).
Additionally, ICE futures Europe is the dominant global marketplace for Brent crude which has served as the world’s global oil price benchmark.
An Introduction to Bakkt.

In August 2018, Bakkt’s parent company Intercontinental Exchange released a statement announcing its intention to use Microsoft’s cloud service Azure to “create an open and regulated, global ecosystem for digital assets.”

This new company, dubbed Bakkt, would start right off the bat with the inclusion of federally regulated markets and auxiliary services, like warehousing. It would even feature Bitcoin to fiat conversions, a feature that is rare on cryptocurrency exchanges and one of the major differentiators between market-movers and also-rans. In total, Bakkt expects to serve a digital marketplace that moves $270 billion per year.

“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,”

Intercontinental Exchange founder and CEO Jeffrey Sprecher said in the statement.

About Bakkt

Bakkt’s flagship offering is slated to be a U.S.-based futures exchange and clear-house plan for single-day, physically delivered Bitcoin contracts coupled with physical warehousing. Bakkt estimates this will be available as early as November 2018, pending approval by the U.S. Commodity Futures Trading Commission. The clearinghouse, Bakkt noted, will be backed by a guarantee fund supplied by Bakkt.

Eventually, Bakkt hopes to service all levels of the cryptocurrency supply chain, from casual investors to mega-merchants, like Starbucks. In fact, Starbucks will be the first major merchant to work with Bakkt on ways to “convert their digital assets into U.S. dollars for use at Starbucks,” according to Maria Smith, Starbucks vice president for partnerships and payments.

Other investors and potential Bakkt partners include a laundry list of well-known financial institutions, including Alan Howard, Pantera Capital, Fortress Investment Group, Eagle Seven, Galaxy Digital, Protocol Ventures, Susquehanna International Group, and Horizons Ventures.

“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,” Bakkt CEO Kelly Loeffler said in the statement. “We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce.”

What the Market Is Saying
It’s likely no coincidence that “Bakkt” sounds suspiciously like “backed.” After all, it’s a project of the company that founded the New York Stock Exchange, it’s built on Microsoft technology, it has a slew of big-name institutional investors already on board, and its first major merchant is none other than the ubiquitous Starbucks.

In the wildest fever dreams of cryptocurrency enthusiasts, it’s hard to imagine a more complete slate of market players. All that’s missing is an Amazon endorsement and a gilded letter from the U.S. Securities and Exchange Commission promising Bakkt unfettered access to the market.

And yet, that’s close to the reality that Bakkt is proposing. By beginning operations with an eye toward regulatory scrutiny, Bakkt is attempting to leapfrog the regulatory hurdles that have challenged cryptocurrency throughout its decades-long rise — and in 2018, in particular.

Crypto market observers have identified a few key advantages of this new player, which all seem positive from an adoption point of view.