In a Medium post earlier today Bakkt CEO, Kelly Loeffler, took to virtual pen and paper and described exactly what Bakkt planned on doing with its vast exchange architecture on behalf of institutional clients.
The results of the post should give goosebumps of Bitcoin joy to anyone who believes that the next crypto bull run could be just around the corner.
Here are some highlights from the blog post via Medium earlier today:
Loeffler describes the use of existing infrastructure to create new products.
“That’s why Bakkt’s foundation uses the existing, time-tested, regulated futures market infrastructure to introduce physically delivered Bitcoin and warehousing to global markets. All aspects of the existing futures market, including institutional-grade onboarding and compliance, will, for the first time, be part of physical delivery and warehousing of Bitcoin. This includes consistent standards for compliance, with anti-money laundering and know-your-customer rules, market surveillance, and reporting standards at the federal regulation level, subject to final review and approval by the U.S. CFTC.”
“By virtue of passporting ICE Futures U.S. and ICE Clear U.S. into other jurisdictions outside the U.S., institutions operating on a global scale can better serve their customers. Bakkt’s first contracts will be physically delivered Bitcoin futures contracts versus fiat currencies, including USD, GBP, and EUR. For example, buying one USD/BTC futures contract will result in next-day delivery of one Bitcoin into the customer’s account. This aspect of physically delivery adds to the utility of Bitcoin, beyond simply trading.”
Loeffler then describes the depths to which Bakkt has gone to ensure security around Bitcoin and its foray into oft-hacked digital assets.
“To meet institutional standards for market integrity and asset security, our trading, clearing and warehousing infrastructure will offer a new level of technology and financial security built on a resilient technology backbone — key parts of which are inaccessible from the internet. This secure network will enable firms to safely connect to our market and warehouse, where Bitcoin deposits will be maintained largely offline.”
“Bakkt’s warehouse design, which we’ve been building since the inception of our initiative, will incorporate high levels of physical, technology and information security. Safeguarding digital assets is an emerging area of expertise, and things like signing ceremonies, biometric scans, sharding, and multi-sig are the new virtual combinations on the vault.”
All of this (Bakkt’s thesis/work/infrastructure) leads to increased access to a growing Bitcoin ecosystem and markets.
“The connectivity and participation requirements of large financial institutions necessarily differ from retail participants on unregulated cash-market crypto-exchanges. These include things like access to FIX API’s, consolidated ticker feeds, regulatory reporting features, and participation agreements. Notably, Bakkt will not rely upon ISDA agreements — which are used in the over-the-counter swaps markets. The existing futures ecosystem, which has a broad range of trading and risk management applications, will serve as a second layer on the blockchain to facilitate more seamless access for institutions. The existing cash crypto market is highly fragmented, which creates inefficiencies and makes market access and information more costly. The availability of Bakkt’s regulated physical delivery market price is designed to offer more information in real-time and greater transaction efficiency.”
Loeffler is as accomplished an exchange executive as there is in the space and brings incredible integrity and gravitas to digital assets and the emerging finance world. Bakkt is an initiative that we have continued to highlight as a catalyst of scale that could leap adoption forward in ways that many have yet to envision.
In Bakkt’s initial announcement they partnered with Microsoft, Starbucks and the NYSE. Names that are synonymous with industries of scale and trust.
This latest post further explains and develops the thesis that Bakkt is set to dominate the coming wave of institutional Bitcoin trading, and send volumes parabolic.