NYSE operator to open a Crypto-backed Platform

NYSE operator to open a Crypto-backed Platform

There’s something bigger than Bitcoin ETF as Atlanta-based Intercontinental Exchange (ICE) which own the Newyork Stock Exchange (NYSE) being the world largest operator of stock exchanges on 3 August, 2018 announced plans to create a Microsoft cloud-powered “open and regulated, global ecosystem for digital assets”.

Operator of NYSE – under a new company – Bakkt – (a new company designed to bring digital assets to the mainstream and help unlock the potential of crypto technology) will work alongside a marquee group of enterprise that includes BCG, Microsoft, Starbucks, and others, to operate a new ecosystem CEO explain NYSE-backed crypto platform. 

Jeff Sprecher, Intercontinental Exchange chairman and CEO, with his wife Kelly Leoffler, an ICE executive who will be the CEO of the startup Bakkt – on the trading floor of NYSE has taken the opportunity to explain exactly how NYSE-backed crypto platform will operate.


In an article title “An evolving market – the need for trusted price formation”, Leoffler explains some of the concern regarding current crypto investment options, which is certainly those held by institutional investors and exactly how Bakkt (company behind NYSE) hope to mitigate for them.

“Whether you’re an investment manager seeking federally regulated, institutional trading and security solutions or a consumer looking for more choice in transacting, we’re working to make the vision for wider application of digital asset a reality.”

As such, she continues…
“Trusted price formation is a fundamental part of advancing the promise of digital currencies, and as such the Bitcoin contracts sold by Bakkt will be fully collateralized or pre-funded”. “Our new daily Bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset.”
One of the issue with the Securities and Exchange Commission (SEC) in their investigation of Exchange Traded Fund (ETF) is the price formation (or price discovery – as it is often referred to), and it the essential mechanism by which any financial market determines the spot price (not value) of the asset or services it offer, and was one of the sticking points to the SEC rejection of the proposed scheme from Gemini, which as a result, brings a sharp fall in the value of Bitcoin.

The fact that the Tyler and Cameron Winklevoss plan would have only used Gemini’s own market to source its price information left it open to the criticism that the price of the asset at the centre of its proposal could be more easily manipulated to the detriment of investors, and thus, was rejected by SEC.

SEC lawyer – Jake Chervinski in recent tweet-storm on Bitcoin Traded Funds noted some of the commenter on such matters – went through some of the problems the SEC has had with Bitcoin investment schemes, which it began to outline in letters at the start of the year, and have expanded on their rulings against Gemini.

“9/Proshare also fixes some problems that the SEC had with Winklovoss. For example, Winklovoss would have used only the Gemini exchange to buy & price Bitcon, while Proshare would use the well-established & regulated CME & CBOE future exchanges”.

The NYSE – Bakkt – Crypto-backed platform is an integrated platform that enables consumer, merchants, and institutional investors to buy, sell, store, and spend digital assets on a “seamingless global network”, and the first used cases will be for trading and conversion of Bitcoin (BTC) against fiat currencies, which ICE notes is currently “the most liquid cryptocurrency”, to enable consumers purchase any item at their local Starbucks, in what will be crypto’s debut with the popular chain.

The ecosystem is expected to include “federally regulated markets and warehousing” alongside “merchant and consumer application”. As an initial component of the Bakkt offering, Intercontinental Exchange US.-based futures exchange and clearing house plan to launch a 1-day physical delivery Bitcoin contract along with physical warehousing in November 2018, subject to CFTC review and approval.

The founding imperative for Bakkt will be to make Bitcoin a sound and secure offering for key constituents that now mostly shun it – the world’s big financial institutions. The goal is clear way for major money managers to offer Bitcoin Bitcoin mutual funds, pension funds, and ETFs, as highly regulated, mainstream investment.

“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. We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce” – Kelly Leoffler.
So, those who invest via Bakkt will be buying Bakkt, not Bitcoin as such – Bakkt will own the Bitcoin, or at least promise to own Bitcoin at some point, and oversee the mechanism deciding what it worth. In exchange for centralized power, it will offer those investors the reassurance of its systems, liquidity, oversight and good name.

Important point to make about the Bakkt-NYSE system is that, unlike some trading platforms that have been making headlines recently, it system will not allow for “margin, leverage and cash settlement” – essentially the mechanisms for borrowing of money to fund investments, which have lately been the focus of concern regarding the effect that such trading is having on an already volatile evolving market.

Coupled with a secure, regulated warehouse solution, you can begin to see that how this market infrastructure can help more institutions and consumer participate in the assets class. These regulated venues will establish new protocols for managing the specific security and settlement requirement of digital currencies. In addition, the clearing house plans to create a separated guarantee fund that will be funded by Bakkt.

By mobilizing a trusted market infrastructure, ICE says it intends to design Bakkt to 
support transaction flow in the $270 billion digital asset marketplace, and facilitate its secure and efficient evolution.

Investors in the Bakkt ecosystem are expected to include Microsoft’s venture capital arm, Mike Novogratz’s Galaxy Digital, Alan Howard, Pentera Capital, and Susquehanna International Group, LLP, among others.

Summarily, why I said there’s something bigger than is Bitcoin ETF right along the way? This is because Bakkt CEO explain NYSE-backed crypto platform, and they are the LARGEST stock exchange in the whole world, amassing a total market cap of 23 TRILLION dollars, and 100x bigger than all of crypto. 

They have decided to open a crypto exchange together with Starbucks and Microsoft including crypto investment products such as 401(k) and possibly to replace credit cards.
Now that the big guys are coming and there is one thing that makes all the difference, they will physically back their leveraged trading with Bitcoin. That means, they will need to buy the Bitcoin first from the market, driving up the price.

With Bakkt being announced, ETFs now also have a much higher chance to be approved because the big guys (Microsoft, Starbucks, NYSE) have made their move and politically approving an ETF will be seen as smart, since the big guys also do it. That’s why the SEC is probably reviewing ETFs again. 

An ETF approval will add extra fuel to the fire. And since institutional money now has a definite date – November, this is alongside the very positive sentiment and strong traction among the first coins already. The Crypto Bull Run may kick off any moment from now, so it’s up to you to invest into Bitcoin and other reasonable altcoin, and up to you to either stay up there calling Bitcoin a scam or dead. 

Don’t let what happened to you in 2017 repeat itself this year, when Bitcoin unexpectedly rose from $2,700 to $20,000 before your eyes. Smart people learn once in life, and now the choice is yours. 

As at last year, there was no positive news or move toward Bitcoin, but its surge to that level, guest what this year after several positive news and move by the Bitcoin boys and institution toward Bitcoin. The choice is yours.

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