Category Archives: Bakkt

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Bakkt Delayed Over Bitcoin Custody Concerns

Highly-anticipated cryptocurrency platform Bakkt has run into trouble with the US Commodity Futures Trading Commission (CFTC) over its custody plans for clients’ Bitcoin.

Bakkt promised prospective clients it would request from the CFTC permission to provide the first Bitcoin futures that would be physically deliverable daily, as well as storing clients Bitcoin in a physical warehouse on their behalf.

However, according to sources familiar with the matter, the CFTC has said that Baakt’s custody protocol would need to take further steps in protecting the cryptocurrency in order to be compliant the commission’s rules. It said they would ”require disclosures of the venture’s business plan and a public comment period, which would have further delayed approval.”

The CFTC has suggested Bakkt register as a trust company to circumnavigate these issues, although it was claimed this could be a time-consuming process and the firm wishes to minimize any further delays. Initially scheduled for a November 2019 launch, several issues with the CFTF have pushed the debut back.

A spokesperson for Bakkt told the Wall Street Journal: ”We are working through the regulatory review process and are looking forward to updating the market soon.”

 

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German Derivatives Exchange Supposedly Considering Crypto Futures Contracts

German Derivatives Exchange Eurex May Launch Crypto Futures Contracts

German-operated derivatives market Eurex is rumored to soon turn on the futures contract faucet, releasing its own set of cryptocurrency derivative contracts. If true, the first wave of contracts will include Bitcoin, Ethereum and Ripple (XRP) coin future contracts.

Citing people familiar with the development, media outlet The Block Crypto said that the exchange is meeting with market making experts with regards to the product.

Though no official comments have been made by the firm, the move, if true, comes as no surprise seeing how it had set its target on the crypto market since 2017. In 2018, a division was set up for crypto assets and distributed ledger technology. During that period, a Deutsche Börse spokesperson reportedly told German-based news media:

“We are thinking about futures, with which private investors and institutional investors can protect existing investments in bitcoin or set for falling prices of the cyber currency.”

More so, while Deutsche Börse acknowledged the fact that they have been in touch with the space for a while now, it had only been in the “ideation and exploration” phase but will need a “centrally steered approach” for a full-scale expression of the technology in their business.

The future of the crypto derivative market continues to take shape as new players are being introduced joining others in the queue for regulatory approval. Bakkt, Seed CX, and ErisX are among those seeking to introduce new settlement types into the US market – the physical Bitcoin settlements – adding variety to already established market place for crypto futures contract offered by pioneers CBOE and CME.

CBOE also wants to launch an Ethereum futures contract and is only waiting for the approval from the regulatory watchdog. So far, net sentiments from the idea of an Ethereum futures contract have been somewhat positive.

A couple of other cryptocurrency exchanges such as BitMex, CoinFloor, and Binance are already marking their space in the advanced cryptocurrency market to suit sophisticated investors. As the industry continues to mature, perhaps the market will take a complete semblance to that of the traditional financial market and may appeal to more mainstream traders and investors. Although regulation may be pivotal to this development, the CFTC has a workaround on how to allow the exchanges self-regulate in line with the stipulated financial laws, as an interim approach before a more constituted legal infrastructure is in place.

Moreover, the major contention lies in the security of services provided – the custody infrastructure and market monitoring instruments – constituting major impediments to the launch of other derivate market classes like the Bitcoin ETF, which has had many of its proposals declined or for many months under review by the Securities and Exchange Commission (SEC).

Nonetheless, it behooves any financial service operator willing to engage in this emerging market class to do a proper groundwork before launching any product into the market. As there are currently a few products, yet only a handful of institutional investors have dipped a foot in the water, although this number may be increasing steadily, still it only proves that a more comprehensive market infrastructure may be the only key to unlock the market for a full-scale adoption by institutions.

 

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Virginia Police Retirement Fund Sets Sights on Bitcoin with $11 Million Investment

Part of a police retirement fund in Fairfax County Virginia is to be invested in the cryptocurrency industry as part of a plan to allocate money towards safe investments.

The allocation of retirement funds will be invested through Morgan Creek who will use the fund to invest in companies such as Coinbase and Bakkt, among others. Morgan Creek, which invests in blockchain companies, is to use USD 40 million from the two Fairfax county pension plans and other institutions.

The Virginia retirement system has invested USD 21 million into the fund with USD 10 million coming from the county’s employee’s retirement fund (0.3% of total assets) and USD 11 million from a police retirement fund (0.8% of total assets). This meant just under 1% of total assets were dedicated to cryptocurrency ventures. In the opinions of Fairfax County officials though, the funds are seen as a safe bet for retirees:

“All investments involve risk and this investment is no different. However, as they would do with any investment, Fairfax’s investment team determined that the expected returns from this investment were in line with the level of risk incurred. This also played a big part in how much was invested.”

Morgan Creek has convinced Fairfax county to invest up to 15% of retirement funds into cryptocurrency projects although Fairfax County Retirement Systems Director Jeff Weiler has said that “no more than 15% of the funds will be invested in actual cryptocurrencies and, to-date, the Fund has no exposure to any cryptocurrencies”.

Morgan Creek’s Anthony Pompliano believes Bitcoin could still go below USD 3,000 although he points out that a recovery to USD 5,000 would result in a USD 5 million investment in Bitcoin returning a USD 1.9 million profit.

 

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Chinese Billionaire Claims Bitcoin Patience Will Reap Rewards

Chinese Billionaire Claims Bitcoin Patience Will Reap Rewards

As the much-discussed intuitional investment, hailed as cryptocurrencies jumpstart to a new crypto era, still awaits, a Chinese Bitcoin billionaire calls for patience.

Zhao Dong, one of the world’s largest over-the-counter traders of Bitcoin, made the plea to the industry suggesting that it could be well into the year before the market gets the boost it needs. The entrepreneur was talking on a WeChat group called “The Public Chain Alliance Crossing The Bulls And Bears Elite Team”, when he made the call for patience.

Zhao, another advocate of a USD 50,000 Bitcoin by 2021 not so long ago, said the “only thing you need is patience”, referring to a large investor surge into the market. He said that those who believed in the future of Bitcoin should hold “as much as possible when nobody cares”. He said also:

“In the bull market, I don’t persuade people to buy bitcoin, because it seems easy to make quick money but in fact, it is not. Now [in the bear market], I start to talk people into buying bitcoin.”

Zhao certainly is not alone, with other high flyers in the industry talking up the flagship cryptocurrency this year, with just Twitter’s CEO Jack Dorsey recently predicting that Bitcoin was to become the internet’s first “native currency”.

As Bitcoin investors and traders wait for the highly-anticipated Bakkt bitcoin platform and a US Bitcoin exchange-traded fund to boost the price, Mike Novogratz predicts Bitcoin is on the recovery after a bubble burst and that it is in a period of “handing off ownership from the people’s revolution“.

 

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NYSE chairman Calls Bakkt a “Moonshot Bet”

Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange sees the eventual Bakkt launch as a “moonshot bet” according to its CEO and chairman of the NYSE, Jeff Sprecher.

Talking over the past few days, Sprecher says that he is optimistic that Bakkt will be worthwhile and sees ICE’s involvement as “different” claiming that the deal has “…been organized in a manner that is very different than the way ICE typically does businesses.”

Making the remarks at a conference call yesterday he suggested that there will be a launch this year, after earlier delays and the implications that it could be soon. “Bakkt has its own offices, its own management team, etc. They’re well along in building out an infrastructure that I think you’ll see launch later this year,” said ICE’s boss.

Bakkt, which will offer institutional investors bitcoin futures trading, should have gone live in January but was postponed partly due to the US government shutdown at the time. The claim is that Bakkt will provide custody and price discovery for bitcoin which will be free from market manipulation and fraud.

There is speculation that the move by NYSE could bring the long-awaited wave of institutional investment into the cryptocurrency space, thus rejuvenating the flagging market; a market which has seen some revitalization over the past 24 hours.

Scott Hill, ICE’s chief financial officer said that Bakkt-related expenses for the first quarter topped $20 million stating “Our investment in Bakkt will generate $20 million to $25 million of expense based upon the run rate in the first quarter.”

Sprecher said, by bringing in Starbucks and Microsoft the potential is for a “very valuable company” to be created.

 

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Fake Bakkt Emails Circulate, Claiming Profits for Investors

Fake Bakkt Emails Circulate, Claiming Profits for Investors

There are reports of email being received from what claims to be Bitcoin futures trading platform Bakkt. The emails, bearing the subject line “Bakkt News!” and purporting that the platform will launch on 12 March 12, at first sight seem convincing.

First of all, the email is sent, not from an official Bakkt account, but from a Gmail one. Secondly, the English used in the email itself is written in a manner that clearly suggests an automatic translation program was used to compose it. Thirdly, the email diverts users to a website, bakktplatform.io, which is not the official Bakkt website.

The website simply asks visitors to register by providing their name and email address. The complete lack of KYC, AML checks and other information leaves no doubt on the fake nature of the website.

Post registration, investors are presented with a Bitcoin address where they can transfer their investment. The website also asks for investors’ Bitcoin addresses, with the promise of giving profit returns within three days of the platform’s launch.

The actual Bakkt has denied any connection with the email and the website, saying, “…that is not a Bakkt website and we wouldn’t have communicated in that way.” The real platform also does not have any launch date at the moment. The platform has still no green light from regulatory point of view. Unless that is given, it cannot even start to offer its services.

 

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Kraken Acquires Crypto Facilities in “Nine-Figure” Deal

Crypto Exchange Kraken Acquires Crypto Facilities In a 'Nine-Figure' Deal

In a report yesterday by news outlet Fortune, San Francisco-based cryptocurrency exchange Kraken made an M&A move towards British trading firm Crypto Facilities in a “nine-figure” deal, a reassuring gesture of the coming of high-profile investors into the crypto space.

Recently, Bitcoin News reported on how an expected full-fledged institution uptake has slowed down, most likely due to regulatory and infrastructural shortcomings. However, “institutional investment” clauses continue to pool millions of US dollars into the cryptocurrency market, as revealed by more frequent mergers and acquisitions (M&A).

According to Kraken CEO Jesse Powell, the deal had been in the works for about 10 months and was only awaiting approval from UK’s financial regulator, the Financial Conduct Authority (FCA).

Kraken, which is currently on the cusp of a USD 100 million funding round from its larger customers made up of accredited investors, has made this move in order to provide trading facilities for institutional clients. Although it made it clear that this service will not be available to the US customer base.

At press time, Kraken is #43 on a 24-hour volume rankings of exchanges and has seen over USD 42 million trading volume in the past 24 hours from 72 trading pairs, according to CoinMarketCap data. The acquisition move means Kraken has positioned itself to be the first cryptocurrency exchange with both a spot and futures trading service in Bitcoin, Ethereum, and Ripple, making it a one-stop shop for crypto trading and derivatives.

The report further highlights other acquisitions made in the past by the exchange to include smaller exchanges, crypto research, and digital wallet firms. This achievement puts it on par with other exchanges to include Binance and Coinbase looking to scale up operations for the prospective market.

The previous year saw quite a number of acquisitions and mergers such as BitGo’s acquisition of the Kingdom Trust Company as well as Kingdom Services to provide institutional clients with regulated custodial services. Early this year, Intercontinental Exchange’s Bakkt said it had acquired certain assets of Rosenthal Collins Group (RCG), an independent futures commission merchant.

The recent spike in mergers and acquisitions brings back memories from the age of the internet boom, which saw an instrumental bear market that reshaped the industry. Smaller companies were being absorbed by larger corporations and the consolidation of internet firms solidified the place of infotech in today’s economy.

Perhaps, similar occurrences await the crypto boom and bust as with the early internet days, and if so, there’s a fierce competition for the future-grade blockchain and cryptocurrency market – which so far, paints a picture with institutional investors being pivotal to that reality.

 

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If Institutions Could Change the Crypto Market Narrative, What’s Keeping Them?

If Institutions Could Change the Crypto Market Narrative, What’s Keeping Them_ (1)

Last year saw lots of interest from institutions, who were a part of a hype-drive that supposedly should have ushered Bitcoin and the altcoins out of a prolonged bear market in 2019.

Suddenly, the prospects for institutional investments in the cryptocurrency markets have far more long-reaching effects than the actual application of the blockchain technology itself. It suggested that investors were bored with the cliché of what blockchain is and its potential, and are far more interested in how much they can profit off its underlying asset class.

Institutional investor flux

In preparation for these new class of investors, crypto ventures were adjusting their business infrastructures to accommodate the changes that would ensue from the influx of these sophisticated investors.

Top cryptocurrency exchange by trading volume Binance reportedly added sub-account features; Chicago-based cryptocurrency exchange Seed CX introduced spot trading facility for institutional investors; number one US crypto trading platform Coinbase launched an over-the-counter (OTC) trading platform for institutional clients; Circle’s Poloniex opened up trading services exclusive for institutional clients, and many more strides in the direction of high net-worth investment categories.

Perhaps the most currently notable investment interests for this class of investors include those to be offered by Intercontinental Exchange’s (ICE) Bakkt and Fidelity. The growing interests in these platforms suggest that these products would probably turn the tides for the crypto market upside, as it is perceived that they would offer a fresh inflow of capital and liquidity into the space.

Rewriting the market narrative

Accordingly, when the market crashed in November 2018, falling below the supposed bottom of USD 6,000 at the time, many thought that was the moment for institutional investors to hop in. Still, prices have breached many more speculated bottoms and are currently hovering around USD 3,400; yet, most of these investors have stayed their hands. One question, if these investors could actually change the narrative for the market, what’s stopping them?

Here are a few pointers: liquidity issues, susceptibility to market manipulation, regulation uncertainty, and crypto custody issues. Above all, the right framework may yet be the reason why these investors have not fully immersed themselves.

Moreover, insights provided by John Devlin, chief analyst at P.A.ID suggested that crypto needs to rise above stigma, and also become more regulatory compliant: “According to P.A.ID Strategies, 68% of Bitcoin exchanges across the US, and Europe is not KYC compliant.”

On another note, head of regulatory surveillance and marketplace at Nasdaq Tony Sio told business insider that while lots of exchanges were reaching out for Nasdaq’s SMARTS Trade Surveillance platform, it was however difficult because according to him, as a startup, “it is quite hard to set up because it requires a fair bit of work… [and] probably one of the sticking points”. This would imply that some of these investment propositions to institutions need time to develop and mature before implementing to scale.

Although some of the new projects reportedly claim that they are working diligently to ensure that their final product will meet the standards and expectations of the new class of investors. However, it remains to be seen exactly how the market will play out in the event that these platforms are finally launched.

 

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Only 3% of Americans Bought Something With Bitcoin Last Month, A 5-Year Bet Reveals

A recent podcast by Planet Money, reflected on a bet made 5 years ago between Bitcoin bull and venture capitalist Ben Horowitz whose firm has made investments worth over USD 50 million into crypto and financial journalist Felix Salmon, paints a peculiar angle on Bitcoin adoption.

The bet which hinged on the adoption state of Bitcoin in 5 years as currency, had Horowitz predicting that it would have revolutionized the face of e-commerce such that 10% of people living in the US would use the currency for frequent online purchases. This happened back in 2014 when Bitcoin’s price wavered around USD 360 to USD 760.

Meanwhile, Salmon was confident about his bet, stating how Bitcoin’s value will indeed increase but not because of its use but rather based on a speculative rise in value. He cited how those who bought Alpaca socks using Bitcoin would regret, noting the price increase, and would have preferred sitting on it rather than spend it.

A sample pool survey was recently conducted to know who had won the bet – gauging how many Americans currently use Bitcoin for everyday online purchases. The bet was concluded recently, having to declare Salmon the winner, as only 3% of 900 Americans had actually bought something with Bitcoin in the past month.

Real Adoption

The mainstream real adoption of Bitcoin can be approached from three angles: One, where people who actually buy the coin become long term holders (store of value), hoping the price will reach astronomical highs and cash in on the ‘patience-profit.’ The second, where cryptocurrency adoption has been heavily facilitated by payment infrastructures such as merchant adoption, and the increased installation of Bitcoin ATM kiosks. The third has to do with the introduction of sophisticated markets such as futures contracts and exchange-traded funds (ETFs) for institutional investors.

Regardless of the adoption route, most of the early sentiments were founded upon hysterical predictions based on the assumptions that Bitcoin and its underlying technology had come to replace legacy financial systems and hence prices would go as high as USD 50,000. However, these sentiments have been counterbalanced by a rather economically bearish one that renders the initial logic as heavily flawed.

The outcome is a juxtapose of a computer science-based backing of the blockchain, Bitcoin, and cryptography, as against economic assessment of currency functions and financial asset manipulation. More so, many now rely on the economic aspects for further adoption at this point. This is the case with the constant lookout for institutional grade investment opportunities like those of the Bakkt; in the hopes of repeating what CME Group and CBOE’s Bitcoin futures contract did in late 2017.

It is clear though, that back in the early days of the industry’s development, very important structures such as scalability, and regulations were of little concern, and may have consequently cost the industry years ahead of a full-blown mainstream adoption of Bitcoin.

Over time, many influencers have taken turns on the prediction wheel; John McAfee had his predictions set to USD 1 million per Bitcoin; Thomas Lee thought at best case scenario, it would reach USD 25,000 in the past year but later on blamed regulatory uncertainty for falling short. So far, none of the near-term predictions have materialized. If anything, Bitcoin as a currency has struggled to maintain upward price projections, and as a store of value, it’s really still too soon to tell – 10 years into its development.

One thing is certain, treating Bitcoin like some gambling chip is a lot riskier than the real deal. While the tech does hold promise and has ushered in prospects of a great financial revolution, the subject of adoption will apparently continue to be an important one many years from now moving forward.

On the tech side, industry adoption has been growing consistently with legacy systems fine-tuning system processes using the distributed ledger.

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Is 2019 the Year of the Crypto Bull Market?

Is 2019 the Year of the Crypto Bull Market?

How Long Will the Crypto Market Bull Sleep?

Speculations about the cryptocurrency market continue to weigh heavily on the hearts of crypto enthusiasts as the market is yet to improve from the slump of 2018. The space is now left with dashed hopes, closed crypto exchanges, layoffs, hacks and a whole lot of constructive partnerships by the very few who truly understand what the blockchain is all about.

Reality has become grim for investors who hopped in at the all-time-high, especially shattering the expectations fueled by crypto influencers – the claims of Bitcoin reaching a high of USD 100,000 at the end of 2018. The ‘lambo’ songs that once reigned in many social communities have lost its savor as the lingo is being replaced with more realistic expectations such as measurable development goals and expected platform launch date.

Where are the 1000x’s promises?

Tough times greeted the new year, though still at the beginning of the year, many investors, as well as spectators, are wondering why the market still hasn’t had a bull run even though interest in blockchain has spiked. Some blame it on the delay in the entry of institutional investments.

Ripple CEO Brad Garlinghouse provided his personal opinion in a Blockchain Summit in Europe held at Brussels, saying that he estimates a 5 to 10 years waiting time for mainstream crypto payments.

This may be heartbreaking, as 5 years is indeed a long time to wait before hitting those 1000x’s again. More so, one would wonder if Ethereum’s co-founder Vitalik Buterin was right about his earlier predictions on the end of 1000x’s in crypto space. However, in just under a decade, cryptocurrency has evolved many times over.

The flagship cryptocurrency Bitcoin started its dramatic steep decline in the wake of 2018 and dragged the whole market with it after grazing