Bakkt remains a hot topic of discussion across the crypto ecosystem. It is seen in some corners of crypto as a bear market savior while others see it as another institution watering down the original intent and purity of Bitcoin itself. Either way, it is the most talked about institutional initiative among many – and a who’s who of crypto venture capital firms have made bets that Bakkt will be a roaring success.
Of interest over the past week, with appearances at Coindesk’s Consensus Invest conference and other appearances, CEO Kelly Loeffler and Intercontinental Exchange CEO Jeffrey Sprecher made comments that hinted at more crypto futures contracts being traded on their network. Bakkt then sent out a tweet that did more than hint at the idea, rather claiming that they remain open to adding ‘additional contracts as the landscape evolves’.
The ‘landscape evolving’ is a reference to regulation, pure and simple. The guidance principally given by the SEC and CFTC will be what rule the day for institutions. But don’t fool yourself here – Bakkt already has a pretty good idea where regulation is going and are planning there next move.
Could that move be adding Ethereum contracts? We believe that it will be and we have information that gives us confidence in that call.
According to three separate sources Bakkt offering documents originally listed Bitcoin and Ethereum as launch cryptocurrency contracts. Sources familiar with those documents disclosed that Bakkt took a step back when they couldn’t get clear regulatory clarity on Ethereum that would make them comfortable enough to launch with it.
One specific quote from a well-connected source:
“Their original offering docs had ETH included but they backed away. The next time we took a look at it (Bakkt), from an investment standpoint, ETH had been removed and only Bitcoin remained. Regulatory approvals are paramount in a launch of this scale, so they thought better than to go the route of ‘ask for forgiveness’ after the fact. I would expect the next contract they offer to be Ethereum.”
The original Bakkt offering documents touted Ethereum in the same way that Bitcoin has been featured on its network. The same custody solution and physical warehousing/delivery facilities that have been all the rage for institutions since Bakkt announced its intentions.
The original inclusion of Ethereum as an ‘additional contract’ in its offering documents sends a strong signal that Bakkt will eventually offer ETH contracts and effectively mushroom ETH trading of scale.
Comments from regulators in different forums have hinted that Ethereum could be the next cryptocurrency to be dubbed a commodity instead of a security. When that happens (and we believe that it will) you can expect Bakkt to add Ethereum contracts.
The parent company by which Bakkt was birthed, Intercontinental Exchange (or better known as the I-C-E) trades trillions upon trillions of global futures contracts connected to commodities and securities of all make and manner; while also being the owner of the ‘crown jewel’ of global stock markets, the NYSE. Ergo, could Bitcoin and Ethereum be seen as the gold and silver of cryptocurrency futures contracts? We believe that to be the case.
A final download and reminder of what Bakkt actually will be doing at launch:
“Bakkt is the brainchild of Jeff Sprecher, the founder, chairman, and CEO of ICE, and a disrupter par excellence. Sprecher (pronounced “Sprecker”) stands alone as the leading force in modernizing the world’s exchanges in recent years from open-outcry pits into super-efficient electronic marketplaces. Along the way, Sprecher built a flailing electricity exchange that he reportedly purchased for $1 into a global trading and data empire now worth $44 billion. “In 25 years he’s gone from nothing to the most powerful exchange entrepreneur in the world,” says Larry Tabb, chief of consultancy the Tabb Group. “He hasn’t failed yet.”
“Sprecher and his investment partners are putting this one-of-a-kind mission in the hands of a first-time CEO who’s Sprecher’s soulmate in both business and in life: Kelly Loeffler. The ICE executive has ridden shotgun alongside Sprecher since the company’s fledgling days in 2002. In 2004, they married. Loeffler long ran marketing, investor relations, and communications for ICE. Now she’s giving up her ICE roles to run Bakkt.”
Keep your eyes on regulators over the coming weeks and into 2019. They hold the keys to the pace and potential scale of crypto adoption and market cap growth.