One could make the case that Fidelity’s involvement in crypto is even bigger than Bakkt. As a massive asset manager to the masses, Fidelity’s commitment (albeit from an institutional standpoint at first) will absolutely raise awareness amongst the investing public.

Several sources familiar with the roadmap at Fidelity’s digital assets group told us that the firm has set a date in March to bring their crypto strategy to market.

The crux of Fidelity’s ‘use case’ for their service has to do with custody and Wall Street names that are looking for a ‘named’ trustworthy partner to dip their toes into the crypto waters.

Per Bloomberg:

“Custody, a commonplace practice in conventional financial markets like stocks, involves a third party holding onto securities to reduce the risk they’ll be lost or stolen. But while a number of startups have sought to offer the safekeeping service, many Wall Street professionals have longed to work with a large financial services firm, a role Fidelity may fill. Others including Bank of New York Mellon Corp., JPMorgan Chase & Co. and Northern Trust Corp. have explored entering the field. Meanwhile, digital coins are constantly stolen, underscoring the need for better safeguards.”

The other backdrop here is this – Bakkt and Fidelity could be on the cusp of a “Goliath versus Goliath” battle for the hearts and minds (and wallets) of institutional investors as they allocate assets into the crypto space. Fidelity passed on the opportunity to invest in Bakkt nearly a year ago; presumably because they knew they were about to launch their own likeminded solution.

And one marketing note…Fidelity has a leg up on Bakkt strictly from a name recognition standpoint. When you say ‘Fidelity’ very few, if any, investors are going to ask you “who’s that”? When you bring up Bakkt to even sophisticated investors you don’t get the same response – rather, you have to take time to describe what and who Bakkt is.

It remains of interest who hits the markets first. Both Bakkt and Fidelity look to be running neck and neck at the moment.

Bakkt has been the talk of the crypto water cooler for nearly six months now. Conversations about it being a “bear market buster” abound, and it just may be. But it has to be approved by the CFTC before that can happen. And as of today, the lights are a bit dim in CFTC offices in Washington, DC – per the US government shutdown.

But that reality isn’t slowing down the inner workings of Bakkt, its staff, and the teams built around the global commodities exchanges controlled by Intercontinental Exchange. The ‘buzzing’ that can be heard amongst those connected to the Bakkt launch is loud and growing. Work is being done and preparations are in full gear.

The clear expectation is that CFTC approval will follow shortly after the reopening of operations at the CFTC following the end of the shutdown. And the Bitcoin initiative known as Bakkt, partnered with Microsoft and Starbucks, will launch like a rocket.

Take a step back and consider the huge venture capital names committed to Bakkt at the moment. A few names connected to their first round of funding read like an All-Star team of sorts: Fortress, Galaxy Digital, Horizon Ventures, M12 (Microsoft’s own venture fund), and a host of others.

The investment is not necessarily a play on Bakkt trading volumes or the price of Bitcoin, but rather on adoption and daily use that Bakkt plans on pursuing. Here is a portion of that case stated by Maria Smith, Vice President, Partnerships and Payments for Starbucks:

“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. As a leader in Mobile Pay to our more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for our customers.”

In other words, the play for flagship institutional investors is not the volatility associated with Bitcoin, but rather the real world application of it when you walk into Starbucks and order a Grande Cordusio. With a swipe of a finger and a push of a button, Bitcoin is deployed and used for purchase at one of the largest retail chains in the world.

So what is happening today as Bakkt prepares to launch an entirely new asset into the commodities space?

The Bakkt team is working furiously as they prepare for a marketing and execution blitz that they believe will produce tremendous volumes and attract all manner of institutional clients very, very quickly.

One source familiar with Bakkt’s preparations had this to say about what they expect once CFTC approval occurs:

“Take a close look at the increased public dialogue that Bakkt is having with the crypto and financial community. Whether it is a Medium post by Kelly (Kelly Loeffler, CEO of Bakkt) or social media posts meant to continue to build a Bakkt narrative, the PR and marketing ramp up is preparing for launch and all that comes with it.”

“Once launch occurs you can expect Bakkt leadership to be all over the airwaves and in front of TV cameras preaching the Bakkt gospel. And that can be characterized as the safety, custody, and daily use case ecosystem that Bakkt provides to investors. Kelly is uniquely qualified to tell that story and will be a media darling.”

More color on where Bakkt is headed once approval is finalized from sources we spoke with familiar with the firm. The Starbucks initiative is a 2020 project and will be carefully talked about in conjunction with reps at the behemoth coffee company. ‘Message discipline’ will be important with respect to Starbucks so as not to fall into the trap of overpromising and underdelivering.

At launch much more will be made of Bakkt’s familial connection to ICE and their technology partnership with Microsoft. Those will be highlighted early and often as they are trusted names amongst institutional investors and global investment banks.

Further, you can expect Bakkt to be more an more visible at larger financial and technology conferences of note. Also expect the Bakkt message to be spread in the largest of media organizations like the Wall Street Journal, New York Times, CNBC, Bloomberg and the like. Bakkt wants to build a lock-tight institutional seriousness around digital assets and the safety they plan to provide to investors. They believe keeping messaging to legacy outlets will send that message.

Messaging, optics, partnerships, adoption, safety, real-world use cases, ICE, Microsoft, Starbucks, and ‘more digital asset products to come’. Maybe Bakkt is the bear market slayer we all hope it to be?

Something is brewing between Ripple Labs and a couple of massive financial institutions. Why and what you might ask? They keep finding themselves in the same rooms together, meet up after meet up, conference call after conference call, and discussion after discussion – all surrounding payment systems that these institutions are considering implementing.

Both Wells Fargo and Bank of America continue to have discussions with Ripple representatives concerning payment processing technology and potential partnerships.

Other banks and financial firms have discussed the same with Ripple: MUFG Bank, WestPac, Standard Chartered, Banco Santander, American Express, Siam Commercial Bank, and SBI. Clearly, Wells Fargo and BofA would be the biggest names and ‘get’ for Ripple Labs as of yet.

Still, from that above group, headliners being Bank of America, American Express, and Banco Santander – who all possess global presences and brands of scale, are partners that any crypto brand would love to add to their client list. Ripple has obviously rolled out the red carpet for these brands and made a commitment to doing whatever is necessary to partner with them.

Ripple continues to make other announcements that have been highlighted over the past couple of months connected to their ever developing payment systems.

Ripple has confirmed the launch of xRapid, a cross-border remittance solution built on the top of Ripple’s proprietary blockchain, last month. The announcement had caused an abnormal bull run in XRP price action, bringing its value up over 100 percent in just a week. The excitement, however, dried off as long position holders began to exit their position on new intraday highs, causing a selloff.

Some of the biggest companies have already nodded to test Ripple xRapid system on their frameworks. These companies include names like MoneyGram, Western Union, Mercury FX, and Cambridge Global Payments. An excerpt from the Ripple website:

“xRapid is for payment providers and other financial institutions who want to minimize liquidity costs while improving their customer experience. Because payments into emerging markets often require pre-funded local currency accounts around the world, liquidity costs are high. xRapid dramatically lowers the capital requirements for liquidity.”

The speculators are expecting these announcements to continue and remain a catalyst for $XRP price action throughout this year. The team announced that it will launch the system in October of last year (which did actually happen), but the actual date of its commencement remains unclear. Unclear or not, having Bank of America and Wells Fargo in the room discussing anything with you is meaningful. Very meaningful.

To the extent that Bank of America, Banco Santander and others will use Ripple’s product line once is it launched and available for daily client and customer transactions also remains to be seen. But there aren’t a dozen cryptocurrency and blockchain firms having these kinds of conversations and building this type of architecture.

In fact, you could count on one hand the other blockchain/crypto firms that are involved, to this serious depth, not only building use case products but actually on the precipice of executing those exact use cases.

While some in the crypto community may scoff at Ripple’s ambitions and the way they go about their announcements, there is real substance involved. Bank of America and Wells Fargo don’t send reps to just anywhere for a nice cup of coffee – they don’t need to based on their reputation and scale.

We expect more and interesting announcements to occur throughout the rest of 2019. Should they rise to the level of actual news and use case seriousness, we will bring it to you.

**To be clear, we are not saying that final conclusions to these talks are imminent and about to be announced. Rather, the inclusion of these firms in any discussions with a cryptocurrency firm is newsworthy. Let’s see how these ‘meetings’ develop and what does, or does not, come of them.

Coinbase and BlackRock have been discussing multiple initiatives and structured products for the better part of 15 months. Not just 2018 or over the summer, as some have reported. Both firms have established working groups that have been ‘passing notes’ that lends strategy and expertise to one another. BlackRock by way of their engagement with regulators and the leaders in establishing the ETF asset class; and Coinbase as the de facto leader in the crypto movement and asset class.

That ‘back and forth’ work has come into focus and a specific structured product is nearing completion and could be filed with the SEC as the calendar moves forward in 2019. This much we are sure of based on industry conversations and ‘on background’ conversations.

What we aren’t certain of, and have been unable to ascertain from those conversations, is the nature and set up of a Coinbase ETF. Will it include multiple coins listed on Coinbase? Will it include more than what is listed on Coinbase? Will it be a largely ‘institutional grade’ ETF with financial barriers to entry that will only allow accredited investors to afford the product? Or will it only be a Bitcoin and Ethereum based product?

Here is a wild card that really piqued our interest – could Coinbase put together a product that includes it’s freshly minted stablecoin $USDC in the allocation of assets within the ETF? Could Coinbase be considering a stablecoin ETF all unto itself?

These are all theories that were postulated and discussed with us over the past month. Whatever the eventual asset mix of a Coinbase ETF submission looks like, it is nearing the finish line and only awaiting the perfect time for submission.

A Long Year Of Research And BlackRock Relationship Building

Throughout the past year, Coinbase has engaged in conversations with BlackRock’s blockchain group in order to leverage the firm’s expertise at launching exchange-traded products. An early pioneer of the ETF market, BlackRock is renowned for its popular, low-cost iShares family of ETFs.

As Coinbase pursues an asset specific crypto ETF, it would join numerous other firms also looking to launch their own, including rival exchange Gemini, Bitwise Asset Management, and VanEck. Several firms have seen their ETF applications rejected by the Securities and Exchange Commission (SEC).

Sources stated that the Coinbase ETF would also likely track a number of coins other than Bitcoin. A Bitcoin ETF has been viewed as a next step in gaining legitimacy as an asset class and could lead to the entrance of more institutional money into crypto markets.

Coinbase’s ETF would need to address the same market transparency and manipulation issues that persuaded the SEC to shoot down 9 ETF proposals. Nevertheless, Coinbase’s conversations with BlackRock support the idea that crypto’s appeal is growing among traditional Wall Street circles.

All well and good and certainly within the scope of establishing a relationship that would favor an ETF approval for Coinbase in the future. But it goes much further than that, and we spoke to a source at BlackRock, on the condition of anonymity who gave us a look behind the scenes as to what is being ‘hatched’ in the Coinbase/BlackRock laboratory:

“The relationship between the two firms has been longstanding, a little more than a year, and has included talks on structured products ranging from credit cards, insurance, ETF’s, IRA’s, mutual funds, hedge funds, and even a possible Coinbase IPO. This isn’t just an ETF story meant to fit the current crypto narrative and what is or isn’t going to happen with the SEC. This is long-term planning with the assumption that approvals will come and adoption will continue to push forward. Coinbase values the breadth and depth of our (BlackRock) brand and has remained cozy and complimentary every step of the way.”

“It is clear that Coinbase aims to be the ‘Fidelity of Crypto’ via its retail operations and focus on compliance, custody, and growth of its institutional offerings. And that type of branding and growth is something that we have immense interest in going forward. Forget about what Larry (Larry Fink, BlackRock CEO) has said publicly about crypto and Bitcoin in particular. That is just smoke amongst a sea of questions marks as to where regulators come down and how the shape of cryptos form around it. At some point, there will be clear language and visibility (November?) and then the two firms could announce several initiatives.”

COULD A COINBASE ETF BE A PRECURSOR TO A $10B VALUATION?

Coinbase just recently executed a $300MM capital raise that valued the firm at $8B and that number created serious buzz in the tech venture capital space. Could a Coinbase ETF approval push that valuation even further? It isn’t that hard to begin connecting the dots as to why Coinbase would choose a partner as revered and lionized in traditional finance as BlackRock for precisely that purpose. In fact, with an ETF approval (or several) Coinbase’s value could stretch significantly beyond the $10B number.

COINBASE REMAINS UNPOPULAR AMONGST CRYPTO DIEHARDS

Coinbase, while somewhat unpopular amongst crypto diehards, has been making choices that seek to establish itself as the first brand amongst the masses that eventually find their way into the crypto space as the regulatory and depth of financial infrastructure builds itself around the globe.

Which makes their relationship with BlackRock all that much more important. BlackRock is THE worlds leading financial institution via the pure mass of assets managed (+6 Trillion). Coinbase is making a very, very shrewd move by keeping themselves close to a firm that wields enormous influence in Washington D.C. and on Wall Street.

If you are going to pursue a serious structured product initiative, there simply is no other firm better suited to assist in navigating the regulatory waters than BlackRock. Whatever your opinion of Coinbase may or may not be, in terms of customer service and as a digital asset exchange, their ability to make shrewd moves based on their brand awareness connected to the bull run of 2017.