The company behind the New York Stock Exchange, a trading platform that is virtually synonymous with Wall Street, is working on a project that will allow investors and market makers to trade digital assets such as Bitcoin and other cryptocurrencies.
Bakkt, the name of the new platform that the Intercontinental Exchange (ICE) is working on, suggests that the instruments traded will be backed by underlying digital assets; for example, the initial product will be futures contracts supported by Bitcoin, but there may be more variety than the digital currency instruments currently traded in the Chicago Board Options and Mercantile Exchanges.
ICE hopes to gain regulatory approval for its Bitcoin futures contracts before the end of the year. The company has brought major financial and technology market leaders as partners in the Bakkt project; some of the companies involved include Microsoft, the Fortress Investment Group, and even Starbucks.
Another interesting aspect of Bakkt is that it will operate its very own blockchain for transaction settlement independently from the Lightning Network currently used by most cryptocurrency exchanges. The idea is to create a platform that will one day support more than just Bitcoin futures; ICE has an ambitious plan to offer as many digital assets instruments as possible. If the Securities and Exchange Commission approves a Bitcoin ETF, for example, ICE would want to either handle trading, manage physical settlements or launch a competing product.
The involvement of Starbucks suggests that Bakkt may also provide an electronic payments solution featuring Bitcoin and other digital currencies. Financial technology developers are currently locked in a race to promote widespread adoption of cryptocurrencies, and this means encouraging circulation by means of retail payments.