Category Archives: Bakkt

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Bakkt CEO Details Mission for Regulated Crypto Trading

The Intercontinental Exchange (ICE), owner of the New York Stock Exchange (NYSE) and numerous other major exchanges around the world, is launching a cryptocurrency exchange named Bakkt. Its CEO, Kelly Loeffler, has revealed some details about Bakkt’s mission and protocol in a Medium post.

Loeffler says Bakkt is “a new company designed to bring digital assets to the mainstream and help unlock the potential of this important technology” and that it is “working to make the vision for wider application of digital assets a reality”.

According to Loeffler, the exchange developed out of a need for investors to have a safe and regulated way to trade, store, and spend cryptocurrency. Bakkt will have institutional grade infrastructure. Conditions are particularly ripe for Bakkt since its development is being orchestrated by ICE, the worldwide leader in stock and futures trading. ICE has the expertise and potential to launch every type of Bitcoin investment product possible in the future via Bakkt. They are starting with physical Bitcoin futures, which is a major development.

Currently, there are Bitcoin futures on CME and CBOE, but these are cash settled so they don’t directly impact Bitcoin’s global spot markets or price. The futures on Bakkt will be settled for physical Bitcoins every day, so they will have a direct impact on global Bitcoin price, and provide a channel for institutional investment to pour into Bitcoin.

Loeffler says one of the primary goals of Bakkt is to facilitate Bitcoin price discovery and it are doing this by ensuring that every physical Bitcoin futures contract has Bitcoin backing it. It does not want to issue any paper Bitcoins, since that would dampen Bitcoin’s price, so Bakkt will not have any leverage.

Looking at this a bit more broadly, Bakkt’s CEO is saying that it expect so much volume on Bakkt that it will determine global Bitcoin price. This is quite possible, since this is basically ICE’s answer to Bitcoin trading, and it could end up being the biggest crypto exchange in history. Physical Bitcoin futures are projected to be launched in November 2018, which could cause a major Bitcoin rally.

 

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Pantera CEO: Investors Overreacting to SEC Delay on ETF

Crypto hedge fund Pantera Capital’s CEO Dan Morehead has said that investors have been pushed into a state of panic by the SEC’s delayed decision on Bitcoin exchange-traded funds (ETFs).

Morehead said on Wednesday’s CNBC “Fast Money” that ETF wasn’t imminent, a view shared a week prior on the same show by Brian Kelly, who saw next year as the most likely date for approval rather than September. He commented:

“The main thing to remember is that Bitcoin is a very early-stage venture, but has real-time price feed — and that’s a unique thing. People get excited about the price and overreact… I still think it will be quite a long time until an ETF is approved. The last asset class to be approved for ETF certification was copper, and copper has been on earth for 10,000 years.”

The SEC has delayed another decision on approval of a Bitcoin ETF after several attempts by investors over the years to push one through. On the announcement of a delayed decision, Bitcoin lost further ground last week.

Morehead suggests that the new Bakkt project should be enough to hearten investors rather than to sell Bitcoin on the basis of a delayed decision. He explained:

“The ETF rejection is the same story we’ve had for five years. The SEC has been very cautious with an ETF… That’s huge news. That is going to be a very profound impact over the next five or 10 years for the markets, and, to my mind, that’s what people should be focused on.”

CNBC’s Fast Money regular Brian Kelly was the first to predict that an ETF was unlikely to happen this year, and is in total agreement with Morehead, arguing that a sell Bitcoin position is not the right one to be taking. He explained:

“It [Bitcoin] has had a tremendous run off of USD 5,800, and that was all really because people thought there was going to be a bitcoin ETF. The SEC came out and postponed that decision. A little spoiler alert, on September 30, SEC will likely postpone it again, because the market is not ready for it and the SEC hasn’t had the answers to their questions yet.”

 

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Starbucks Pro-Bitcoin but You Can’t Spend It in Stores Yet

Misleading reports following the Starbucks working partnership with the Bakkt ecosystem stated that Starbucks would be accepting Bitcoin in stores.

While this is not on its agenda quite yet, the multinational corporation has expressed its support for helping customers exchange their cryptocurrencies for fiat to spend in its over 27,000 cafes.

Partnership with Bakkt

Starbucks is the flagship retailer of Bakkt and has been given the role of developing trusted and regulated working relationships with clients who wish to exchange their Bitcoin to spend in retail stores.

Misleading headlines from outlets such as CNBC that ran with ‘New Starbucks partnership with Microsoft allows customers to pay for Frappuccinos with Bitcoin‘ appear to misunderstand the dynamic of the scheme and assume Bitcoin could directly be used to purchase goods.

A spokesperson for Starbucks spoke to Motherboard to clarify the logistics of its partnership, reaffirming that the exchange is merely a platform to change cryptocurrencies into US dollars that the cafe chain and other outlets can accept. Starbucks did not rule out the possibility of accepting Bitcoin in the future, however, saying it would continue to consider customers wants alongside the changing regulatory space.

Maria Smith, vice president of partnerships and payments for Starbucks, described the corporation’s role as ”pivotal” in the early stages of Bakkt.

Bringing it mainstream

The Bakkt venture is a Wall Street-regulated platform aiming to bring Bitcoin to a mainstream audience, with its founding members including Microsoft and the Intercontinental Exchange (ICE). Bakkt CEO Kelly Loeffler described its purpose as helping ”unlock the transformative potential of digital assets” on an international scale.

A press release from Starbucks Friday notes that the federally-regulated marketplace will, for now, facilitate trades just for Bitcoin to fiat as it is currently the most liquid digital currency.

 

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Brian Kelly Proclaims That Bakkt Is Biggest Crypto News of the Year

Hedge fund manager Brian Kelly, while appearing on CNBC’s Fast Money, has called Intercontinental Exchange’s announcement about its new Bakkt platform as the “biggest news of the year.”

Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange (NYSE), recently announced that with the help of technology partner Microsoft, it was planning to launch a new digital asset platform called Bakkt.

ICE also owns 23 exchanges worldwide apart from the NYSE along with many futures exchanges and clearing houses.  Starbucks and Microsoft will be major partners of Bakkt and will begin accepting Bitcoin and other cryptocurrencies. Bakkt is also planning on launching physically-settled Bitcoin futures by November 2018, which would be a mechanism for institutional investors worldwide to easily buy Bitcoin.

Kelly explained his “biggest news of the year” statement after rejecting that ETF would be approved by the SEC this year, suggesting that he’s not actually optimistic on them being approved in 2018, but the speculation surrounding them will maintain investor interest in Bitcoin regardless of the outcome.

He thinks that ICE’s move is better than Bitcoin futures due to its limitations, given that there are “a limited set of people that can trade it… And a lot of people use it for hedging.”

He recently stated that the last Bitcoin price boost following the CNBC announcement was here to stay, only to see the market drop again a week later. When asked if the ICE announcement might have more effect on prices and whether it would meet with success, he responded:

“Oh, yeah! Absolutely! I mean, they are talking about launching in November… They have been working on this in stealth mode for the last 14 months, they have already talked to regulators, they are ready to go.”

He put the lack of market response to “the biggest news of the year” down to time difference and that he expected there would be a response. Bitcoin at the time of writing is $7,473.89 (CMC). He suggested:

“Back in January, Bitcoin would have gone up 20% on this news. So, I think the bear market has just broken people’s spirit, frankly, and so people aren’t really looking for this… A lot of people I talked to today hadn’t seen the news–came out at 08:30 [UTC -04:00]–people hadn’t seen it till 2, 3 in the afternoon. So, the market is still digesting this, and remember most of Bitcoin trading happens in Asia; so, it was released at 08:30 this morning, that’s 09:30, 10:00 at night on a Friday night in Asia. [When] Asia wakes up, you might see this thing pop.”

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ICE to Launch Exchange, Physically-Settled Bitcoin Futures

The Intercontinental Exchange (ICE), owner of 23 exchanges worldwide including the biggest stock exchange in the world, the New York Stock Exchange (NYSE), and many futures exchanges and clearing houses, is creating a cryptocurrency exchange called Bakkt. Starbucks and Microsoft will be major partners of Bakkt and will begin accepting Bitcoin and cryptocurrency. Even though this is all huge news, the biggest news might be that Bakkt is planning on launching physically-settled Bitcoin futures by November 2018, which would be a mechanism for institutional investors worldwide to easily buy Bitcoin.

Currently, there are Bitcoin futures contracts on CME and CBOE in Chicago, but these futures contracts are settled for cash, and therefore not a good way to buy actual Bitcoins, although there has been at least one exchange for physical (EFP) with the cash-settled futures contracts.

The Commodities Futures Trading Commission (CFTC) will have to approve Bakkt’s proposal but, if approved, it will be the first physically-settled Bitcoin futures in history. The futures contracts will expire every day and be settled for real Bitcoins, making this an excellent way for institutional traders around the world to buy Bitcoin. This could be just as good, or even better, than a Bitcoin exchange traded fund (ETF), which many experts have said would cause a major Bitcoin rally to levels far beyond USD 20,000.

Bakkt will have a built-in clearing house and cryptocurrency custodian, and will have all the regulatory compliance of any ICE exchange, so it seems the physically-settled Bitcoin contracts have a high chance for approval. These futures are projected to launch in November 2018.

Another major part of this story is that Starbucks will begin accepting Bitcoin and cryptocurrency via Bakkt. Vice President for Partnerships and Payments at Starbucks, Maria Smith, says, “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.”

If all goes according to plan, Bakkt could become the biggest cryptocurrency exchange in the world. This is perhaps the news all crypto enthusiasts have been waiting for, and the Bitcoin market has begun to crawl steadily upwards after this story broke the morning of 3 August 2018.

 

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