BAKKT BOARD: Bakkt CEO Pens Update, Announces Board Members

Bakkt continues to anticipate a pending approval from the CFTC to engage in the business of physically deliverable Bitcoin futures. The time and circumstances surrounding that approval has been a constant source of angst for those in crypto anticipating the heft that Bakkt will bring to the ecosystem.

While everyone waits (Bakkt included), CEO Kelly Loeffler posted an update via Medium. The update spoke specifically about the newly formed Bakkt board.

“We are charting a new course and it requires significant work, including by our Board, so I want to recognize our members. Chairing the board is Tom Noonan, a cyber expert and founder of numerous cybersecurity companies, including Internet Security Systems (IBM), JouleX (Cisco) and Endgame. Also joining me on the board are Jeff Sprecher, the Founder, Chairman and CEO of ICE and Chairman of the NYSE; Akshay Naheta, Managing Partner at Softbank; and Sean Collins, Managing Partner at Goldfinch Partners.”

Progress, if not slow and steady. One could make the case that announcing board members is a bit of a stop gap communication given the lack of visibility around when the CFTC may finally give them the thumbs up.

Still, this news coupled with a refreshed valuation approaching $1B, should fill the room for a short period. Maybe slow down the growing ‘When Bakkt’ memes.

SUN DOWN: Tron CEO Justin Sun Blows It On Tesla Giveaway; CT Pounces **Tron and Sun Responds**

The current mess that is a marketing schtick gone wrong at Tron is causing many to doubt the viability of the project and the veracity of its leader, Justin Sun. A Tron giveaway that clearly included a Tesla has backfired in a big way. And all of CT is currently trading memes as the mess is still all over the CT streets.

As it became clear that Tron and Sun didn’t have an immediate intention to make the winner of the contest whole by allotting the grand prize of a Tesla, CT called them out in every corner of the globe.

It is exceptionally rare to get CT to universally agree on anything. This face-palm of a PR screw up has brought all manner of factions together to point and yell ‘boo this man!’

The meat of the issue is this: Justin and the Tron team ran a contest with a prize named to be a Tesla vehicle. A twitter user XRP_UzGar clearly won the contest and should’ve been awarded the grand prize, a Tesla.

“Instead, Justin Sun backtracked and offered him this: However, I do recognize that this is an unfortunate situation, and would like to extend my warmest welcome to the next #niTROn summit in 2020, including a fully paid round-trip ticket to the event location. We are very grateful for your continued support. #TRON”

So instead of a Tesla the winner has been awarded tickets to fly around the world (next year, we might add) to hear and see Justin Sun speak. Ugh.

**Developing…

And as of the last hour Tron and Justin Sun have reversed course:

I’ve happily decided to give away two Teslas to further my mission of creating transparency, reliability and openness about blockchain. I want to explain openly and clearly what happened with the giveaway I announced earlier to clear up some confusion.

To generate better awareness of the blockchain industry and celebrate the introduction our USDT-TRON stablecoin to everyone in the world, I personally decided earlier this month to give away two cars — a Mini in China, and a Tesla for the rest of the world. I created pretty simple rules that I expected to generate excitement and get more engagement for the industry and stablecoin in general.

On Monday, my team on Weibo gave away the Mini through Weibo, and the community has responded happily. The draw brought great, positive attention to the industry. On Twitter, the team used a tweet randomizer tool because Twitter does not have an official drawing mechanism. The team was unfamiliar with the tool and performed a number of test draws to understand how it worked, which has led to some misunderstandings about how we did what we did. We also were unaware there would be concern about the video not being live-streamed and that it would create ambiguity and controversy.

To address those concerns, I decided to create a live-streamed draw to show we are open about everything we do. The person picked in that draw has already contacted us and will receive the Tesla. I’ve also decided to give a Tesla to @uzgaroth.

I spent many hours thinking of ways to show how blockchain and the newly launched TRON stablecoin will be a game-changer for both consumers and businesses. I take that seriously; we will more than likely have a few setbacks along the way. The team has taken some learnings from this, and we are more than happy to collaborate with Twitter and third-party developers to have good mechanisms to select winners (maybe even powered by blockchain technology!)

I personally believe the industry needs to have more transparency, reliability, and openness so that people both inside the industry and out trust blockchain in general and TRON in particular. My mission is to create positive change, and I hope people will continue to join that crusade.

Justin Sun

POP! BANG! JP MORGAN COIN: Hedge Fund Sources Claim Surge In Volumes And Prices Directly Tied To JP Morgan Announcement

Crypto purists scoffed at the JP Morgan coin announcement – and rightfully so. After nearly three years of shunning Bitcoin and crypto altogether, Jamie Dimon and his cohorts cooked up a crypto of their own.

Every news outlet in the world covered it. Every single one. And the news lasted for days and quickly made its way into the heads and hands of what most crypto diehards would call ‘plebs’.

Guess what those ‘plebs’ did with the JP Morgan coin information? They bought Bitcoin, Bitcoin futures, Ethereum (a whole lot of $ETH) and all manner of alt-coins as the crypto markets surged.

We went on the hunt to find out if a hunch we had had some meat to it. In speaking with our staffs friends and family, every single one of them asked “what do you think of the JP Morgan coin?”

That set our ears ablaze and gave us a reason to have deeper industry conversations.

Sure enough several hedge fund contacts were seeing and hearing the same thing. In the short run, the JP Morgan coin announcement breathed new life into the crypto narrative and added a large slice of credibility.

One hedge fund source said the following:

Every adult with a bank account and a job knows who JP Morgan is. So the announcement of a native cryptocurrency brought interest to a renewed and fresh level that had been diminished throughout nearly all of 2018. My wife even asked me about it the day after it was announced. The huge bounce in volumes in Bitcoin and, for example, Bitcoin futures at the CME are indicative of the wave the announcement caused.”

A second hedge fund source went a step further:

It isn’t that far fetched to foresee a look back in six months and point to the $JPM coin as the catalyst that busted the bear market. Sentiment and narrative play a huge role in what remains a pretty small markets at this point. The JP Morgan news pushed prices higher across the board and those price increases weee seriously validated by a surge in volumes.”

Again, nobody with a reasonable grip on the history and mission of Bitcoin and crypto believes that the JP Morgan coin poses any sort of existential threat to the ecosystem. In fact, those that claim that it may just be another shitcoin may not be that far off.

Be that as it may, everybody we’ve run into that is outside the crypto echo chamber has one question and one question alone: What do you think of the JP Morgan coin?

EXCLUSIVE: BITCOIN ETF ‘EVENTUAL APPROVAL’: Another SEC Commissioner Predicts Eventual Bitcoin ETF Approval/s (hedges on risk profiles)

In a yet to be released post in Congressional Quarterly, the lone Democrat commissioner left at the SEC, makes several interesting claims in favor of an eventual Bitcoin ETF approval, and potentially multiple approvals.

Robert J. Jackson Jr., in a long form interview, set to be released on February 11th, believes that he expects an eventual applicant to meet the necessary standards for an approval.

A leak of the document can be found below:

As is pointed out in the first page of the article above, the last vote taken on a Bitcoin ETF (the Winklevoss ETF) was defeated by a vote of 3-1. A quick check via simple math says that a turn by Jackson into the potential ‘aye’ column would put the vote at an even 2-2. That is a profound step forward.

As reported last week, VanEck and Solid X resubmitted their Bitcoin ETF for consideration after pulling it just two weeks prior. This effectively restarted the shot clock for approval, thus taking advantage of market maturity and changing attitudes like Mr. Jackson’s.

VanEck Solid X has gone to get lengths to communicate with the SEC and its commissioners on a regular basis, hunting for the secret sauce that leads to an approval. It sounds like, based on the above rhetoric in the interview, they are having a positive impact on the SEC’s commissioners.

Ultimately the proof will be in the proverbial pudding – and that pudding is votes cast for an approval or disapproval of a Bitcoin ETF. As legal experts have pointed out, the VanEck Solid X pull and subsequent resubmission pushes the shot clock on an eventual decision into the second half of 2019. Given that regulatory agency watchers believe that the likes of Bakkt, Fidelity, Nasdaq, ErisX, and other larger crypto futures initiatives will have been in operation by that time, the specter of manipulation may have dissipated.

Again, time will tell.

BAKKT EXPECTATIONS: APPROVAL TIMELINE: Sources Expect BAKKT To Win CFTC Approval In March (pending US govt shutdown)

For those of you closely watching the Bakkt narrative, in the hopes that the launch of the Intercontinental Exchange initiative will bust the bear market – we’ve got some good news for you. Sources in and around both the CFTC and Bakkt have been whispering about a potential approval and firm launch date.

It looks increasingly likely, pending any disruption via another US government shutdown, that Bakkt will win its CFTC approval and begin trading physically deliverable Bitcoin futures in March. The sources we spoke to refused to go on record, but were eager to share the potential timeline with us. They walked us through the ‘meat grinder’ that is the regulatory process and what to expect from Bakkt once an approval is passed on.

A source familiar with the Bakkt CFTC approval process said the following:

“You have to understand that the regulatory process is different than any reasonable business practice that most of you would recognize. It is ridiculous if you ask me. But it is the reality that we are faced with and are operating in. And understand this as well, the current administration is incredibly pro-business and pro-innovation; yet this process is still a meat grinder. I am sure that Jeff (Sprecher) and Kelly (Loeffler) are frustrated. Most believed that an approval would have come late last year. Either way, here we are, and an approval looks imminent.”

A source close to Bakkt (an early institutional investor in the project) gave us this piece of information late last night:

In a way the delays have helped gather clients who will provide liquidity and volume at launch. The Bakkt team has used the time wisely and spent endless hours courting some of the biggest banks and names on the street to be trusted trade partners from the word ‘go’. All signs look to be headed toward mid-March for a final CFTC sign off. And for those out there that have talked about Bakkt delaying for an extended period of time – that is ridiculous. Take a close look at the resume of Jeff (Sprecher) and Kelly (Loeffler), they aren’t in the business of losing. The launch will occur days after approval is finalized. Short of an elongated government shutdown, expect that to happen in March.”

Bakkt remains the most closely watched institutional development in the crypto space. Why? The vast network of potential clients already committed to Intercontinental Exchange operations (essentially ALL of Wall Street and any financial institution that trades commodities with any meaningful volume) could be the type of Bitcoin volume that could break the back of the bear market and send Bitcoin higher.

Beyond simply a well-heeled potential client list, should Bakkt be successful their announced joint venture partners, Microsoft and Starbucks (Boston Consulting Group – BCG is also an announced joint venture partner, but we will cover that connection in a separate article), represent that kind of adoption and real world ‘use-case’ network that could potentially bring Bitcoin to the masses. Retail, tech, software, devices, and on and on. This is the Bitcoin dream that has brought some of the worlds most well known venture capital firms to the Bakkt table.

The chatter regarding an imminent (albeit 30-45 days) approval from the CFTC should create a buzz and keep the team at Bakkt on alert. If you’ve been keeping score their staff has more than tripled and the list of job openings continues to grow.

They are preparing for the biggest Bitcoin push the crypto ecosystem has ever seen. That isn’t hyperbole. Google search the daily trading volume of gold futures and prepare to have your mind blown. The only way Bitcoin can be added to the Starbucks app and used to pay for your next ‘coffee milkshake’ is the promise of serious liquidity and price transparency. Bakkt is set to provide that in spades.

BREAKING: COINBASE ADDS XRP: Coinbase Pro Announces XRP Deposits, Accepting Inbound Transfers

And the XRP army rejoices. A collective exhale. The mob has been satisfied. Let them eat cake. And all manner of euphemisms associated with a long awaited, yet inevitable, outcome.

Coinbase officially announced that Coinbase Pro will add XRP, the official cryptocurrency of Ripple Labs, and make it available via several trading pairs.

The venerable and hyperactive XRP army is in ‘melt up’ mode at the moment. Here was the official language from Coinbase:

“After 10am on February 25, 2019 we will begin accepting inbound transfers of XRP to Coinbase Pro. We will accept deposits for a minimum of 12 hours prior to enabling full trading. Please note that inbound transfers require the specification of an XRP destination tag.”

“Once sufficient supply of XRP is established on the platform, trading on the XRP/USD, XRP/EUR, and XRP/BTC order books will start in phases, beginning with post-only mode and proceeding to full trading should our metrics for a healthy market be met. XRP trading will initially be accessible for Coinbase Pro users in the US (excluding NY), UK, supported European Union member nations, Canada, Singapore, and Australia. Additional jurisdictions may be added at a later date.”

“XRP is the cryptocurrency used by the XRP ledger, which supports international currency exchange and remittances. The ledger is powered by a network of peer-to-peer servers. All accounts on this network can send or receive XRP to/from each other, while XRP can be used to send underlying fiat currencies between two parties. In this way, XRP can function as a bridge currency in transactions involving different currencies such as US dollars, Japanese yen, Euros, Francs, and others in use on the XRP network.”

“Please also note that XRP is not yet available on Coinbase.com or via our mobile apps. We will make a separate announcement when that occurs.”

JP MORGAN COIN: DIMON DOLLARS: JP Morgan Creates Stable Coin To Process Blockchain Payments, Per CNBC

In a scoop snatched by CNBC earlier this morning, JP Morgan has created a stable coin to process payments at hyper speed and scale. The ‘JP Morgan coin’ has been under development for months and has been widely tested internally at one of the worlds largest banks.

As word spreads across financial media and crypto media alike, the term ‘Dimon Dollars’ has been used. Jamie Dimon, a noted Bitcoin and crypto skeptic, is now the first major global investment bank to use/issue an in-house and native token.

Per CNBC:

The lender moves more than $6 trillion around the world every day for corporations in its massive wholesale payments business. In trials set to start in a few months, a tiny fraction of that will happen over something called ‘JPM Coin,’ the digital token created by engineers at the New York-based bank to instantly settle payments between clients.”

“J.P. Morgan is preparing for a future in which parts of the essential underpinning of global capitalism, from cross-border payments to corporate debt issuance, moves to the blockchain. That’s the database technology made famous by its first application, bitcoin. But in order for that future to happen, the bank needed a way to transfer money at the same dizzying speed that those smart contracts closed, rather than relying on old technology like wire transfers.”

We’ve maintained, even amongst skepticism and some disbelief, that JP Morgan was actively engaging in both blockchain and crypto technology. They have designs on using Bakkt as a resource for client involvement in crypto, and you can bet that sooner rather than later, their JP Morgan coin will be marketed to clients.

How that plays out is anyone’s guess at the moment. But if JP Morgan is good at anything it is marketing it’s in-house products to HNW and UHNW clients.

What does this mean for some of JP Morgan’s competitors? Is it that far fetched to foresee a Goldman Coin in the works? And other coins connected to global investment banks?

You can ‘bank’ on it.

RELEASE: SEC ICO GUIDANCE: Securities And Exchange Commission Issues New Guidance For Investors, Bullet Points On Coin Offerings For Public Consumption

On a sleepy Sunday morning the SEC decided to issue a grab bag of commentary on ‘coin offerings’. The timing is interesting, but it certainly didn’t get past the peering eyes of crypto twitter. The initial paragraph of the release, which looks and feels almost like a carefully coordinated press release (colorful, easy to digest snippets, drop down menus, etc), was an introduction to the guidance positioned for retail investor public consumption:

“Companies and individuals are increasingly considering initial coin offerings (ICOs) as a way to raise capital or participate in investment opportunities. While these digital assets and the technology behind them may present a new and efficient means for carrying out financial transactions, they also bring increased risk of fraud and manipulation because the markets for these assets are less regulated than traditional capital markets.”

The crypto ecosystem continues to wait with breathless anticipation as regulatory agencies craft the constructive architecture that will either move the industry quickly forward or dramatically slow it down.

To view the entire release:

https://www.sec.gov/ICO

MT. GOX DRAMA: PIERCE VERSUS KARPELES: Argument Over Purchase And Revival Plan Of Infamous Exchange Plays Out In Twitter ‘Slap-Fight”

Brock Pierce and Mark Karpeles won’t be breaking bread any time soon. That much become increasingly evident throughout the late evening last night as they engaged in a back and forth as to Brock Pierce’s stated intentions to revive Mt. Gox.

As many media outlets have reported over the past 72 hours, Pierce has designs on acquiring the remaining assets and accompanying intellectual property of the defunct exchange and turning it back into a functioning entity again. He’s even detailed his purchase plan, intimating that it was all but a done deal.

It seems that the ‘done’ part of the deal may have been premature.

In a Twitter mentions back and forth, that quickly became very public (how very ‘crypto twitter’ of the two of you) both men stuck to specific positions. Pierce stating that he had an agreement in place and that the transaction was essentially done/imminent. Karpeles vehemently denying any such agreement, defaulting back to bankruptcy statutes and court appointed trustees. Both men staking out diametrically opposed positions.

It left many wondering where each was getting their best information. Accusations flew back and forth throughout the Twitter conversation. Here are a few highlights:

  1. Brock Pierce claiming that a purchase agreement was in place.
  2. Karpeles responding by denying any purchase agreement was even drafted.
  3. Karpeles claiming that Pierce had threatened to take their argument public, which occurred.
  4. Pierce stating that Karpeles had sold his 88% stake and was now backpedaling.
  5. Pierce claiming that Karpeles was attempting to pocket the $700-800 million surplus.
  6. Pierce claiming that Karpeles has a partner who had ‘secretly’ been doing the negotiating.
  7. Pierce finished the Twitter argument by asking Karpeles “aren’t you about to go back to prison?”

The back and forth held the attention of much of crypto twitter. All sorts of interested parties began searching for information to either back up claims that were made or discredit them.

This document showed up in that search that seemed to be of interest, although it doesn’t have any labeling or signatures that would identify it as being some sort of definitive barometer:

The document does reference several different elements of the Mt. Gox debacle at the time (2014) and the interest from ‘Sunlot Holdings Limited’. But those interests were never consummated and ownership of the entities remains in the hands of bankruptcy court trustees.

A bizaare argument and conversation, publicly displayed, doesn’t move the idea of Mt. Gox being revived forward in any meaningful way. Instead, it will only prove to push the possiblity back.

While we understand the idea behind the revival (name recognition alone denotes value) the complexity presented by bankruptcy court laws, the claims of creditors, and the mountain of BTC involved was never going to allow a transaction to be as simple as the headlines claiming, “Brock Pierce to Buy Mt. Gox”.

The twitter slap fight between these two guys is also an embarrassment in and of itself. These sorts of discussions mean absolutely nothing outside of any sort of legal agreement, courtroom, arbitration or any other such legal entity that would have to pass along approval to allow Mt. Gox to be privately held and operated once again as an exchange. Why media reports didn’t think that through is a mystery.

Neither Karpeles or Pierce are well-served by the back and forth, and did nothing more than waste their time and key strokes in an effort to one up the other.

Beyond that, there are some legitimate questions left to be answered. Is there a real purchase agreement out there somewhere? What would any purchase price look like? What sort of assets would be acquired? Specifically, whither the BTC currently managed by the court appointed trustee?

This story isn’t over.

BEYOND RESEARCH: MORGAN STANLEY CRYPTO: Morgan Stanley Is Discussing Several Different Institutional Bitcoin And Ethereum Products

Morgan Stanley released a report late last year that described their take on Bitcoin and made passive mention of the crypto ecosystem in general. The report was widely reported on and it seems that the headline of choice was Morgan Stanley proclaiming that Bitcoin isn’t as much a store of value as it is an institutional asset class set to take on trading, and presumably, volatility needs at big banks and family offices across the globe.

While this language is and should be offensive to Bitcoin maximalists and anyone who believes in the original mission of Bitcoin – it certainly isn’t a surprise. If institutional (and a plurality of retail) clients ask enough times for something these institutions are going to give it to them, pure and simple. There is serious money to be made by creating expensive structured products wrapped around the guise of crypto volatility. The key words there are expensive and volatility. Expensive and volatility.

Morgan Stanley doesn’t have any interest in building out a warehouse facility or cold storage vault to house private keys and racks of hard wallets. There isn’t any money in it. At least not the kind of money that Tier 1 institutions have an interest in earning on that type of investment.

Instead, they are focused on several structured product initiatives that we’ve been made aware of that should be of interest to anyone attempting to get an understanding about how a powerhouse global investment bank is attempting to meet client demands.

Based on extensive discussions yesterday afternoon and again this morning we’ve heard three specific initiatives that are being *discussed* at Morgan Stanley (FYI – much like Goldman Sachs is in *internal discussions* regarding an Ethereum product to satisfy demand) and could come to market in 2019:

  1. A dedicated institutional trade desk that handles futures, OTC transactions, NDF like products that clients traffic across other Tier 1 institutions (Goldman, Citi).
  2. Internal discussions are ongoing as to whether Morgan Stanley uses Bakkt infrastructure *exclusively* with respect to Bitcoin futures transactions or using every resource that exists by 2019 (Bakkt, ErisX, CME, CBOE).
  3. Leadership in Morgan Stanley’s trading divisions are discussing whether or not to go all in on a Bitcoin NDF as well as an Ethereum product that has yet to be given a trading classification.

**Not included in the above list was a less prominently mentioned discussion point that included where does Morgan Stanley fall once a Bitcoin ETF product is created, as well as other SEC approved products throughout 2019. Discussions remain active as to whether or not Morgan Stanley creates their own branded products that are functionally identical to competitor products, or simply offer competitive products and whatever premium fee structures are inherent in the products themselves.

The discussions moving through trading rooms and in strategy sessions at the firm is not whether or not crypto is sustainable or a ‘flash in the pan’ bubble that will eventually fade. The discussion is focused on regulatory approvals and guidance, strategies to benefit from those new rules, and how to best position Morgan Stanley’s crypto products (should they choose to create native structured products) and services to its largest clients.

Which leads us to the dialogue in the Morgan Stanley research report making the rounds today. It adds context to the discussions internally as the firm positions itself for 2019; a year that those we spoke to believe will produce massive adoption, new (and relatively tame) regulations in the US, and trading volumes set to skyrocket.

The ‘money quote’ in the report, as it was told to us (to pay particular attention to) is this:

The net dollar amount in crypto hedge funds in 2016 was $380MM. Today it stands at over $6B.

You don’t need any other explanation for Institutional ‘fomo’ than those hard numbers. Those are funds that are eschewing fiat based products and diving into crypto, even in the midst of a bear market.

Morgan Stanley wants to be a real player in this market. They are working overtime to figure out just how to do it. Regulatory and legal hurdles need to be appropriately approached and handled, but when that happens they are planning to be at the forefront of what they believe will be a highly profitable new ‘super asset class’.