Intercontinental Exchange (ICE), the owner of the New York Stock Exchange (NYSE) recently announced that they will be listing physically-settled bitcoin futures contracts. The exchange will be forming a new company whose sole mission will be to make bitcoin a mainstream financial asset.
The ICE will be launching these bitcoin futures on a new platform named Bakkt that has been developed in partnership with some of the biggest companies in the world. Companies like Microsoft, Starbucks, and BCG, have contributed to the development of this platform.
This is one of the biggest cryptocurrency adoptions we might have seen because ICE is one of the biggest names in finance. And they will be integrating Bakkt with their U.S. futures market to list a physically-settled one-day bitcoin futures product. They will also have physical warehousing managed in-house by ICE.
This move by ICE will make the institutional investors such as pensions, endowments, and insurance companies a bit less hesitant since ICE is putting their name behind the asset class. Many analysts and other individuals with knowledge of the institutional investing landscape have pointed out that because of the fact that crypto lacks a regulated custodian; it was the primary reasons why the institutions were hesitant to invest in bitcoin.
But with ICE addressing that exact issue, the institutional investors would now have enough reason to jump over the fence and get exposure to bitcoin.
But Bakkt is more than just a bitcoin futures platform. It is intended to be a full-fledged platform that will help digital assets become a mainstream financial asset class.
Here’s what Jeffrey C. Sprecher, the founder, chairman, and CEO of Intercontinental Exchange said:
“In bringing regulated, connected infrastructure together with institutional and consumer applications for digital assets, we aim to build confidence in the asset class on a global scale, consistent with our track record of bringing transparency and trust to previously unregulated markets.”
Bitcoin Becoming Mainstream?
Sprecher laid out his ambitious plans in an interview with Fortune. He revealed that ultimately, he wants bitcoin to become a bona fide currency that could become the asset of choice for international payments.
According to the interview, Bakkt will feature its own “omnibus ledger” that operates on top of the bitcoin blockchain, similar to the Lightning Network (LN). The platform is set to launch in November, pending regulatory approval.
Once the assets are custodied with ICE, the platform will then be able to allow the institutions and businesses connected to the Bakkt ledger to have frictionless transactions.
At the end of the day, ICE is trying to make bitcoin into a global currency because according to Sprecher, it will greatly simplify the global money. Not only that, it is the only candidate right now to have the potential to become the first worldwide currency.
To make that happen, ICE has partnered up with several blockbuster companies that we mentioned above to help them out through the process.
For instance, Starbucks will be taking an active role in providing consumers with the ability to seamlessly convert their holdings into USD so that they can use them to pay for items at Starbucks locations.
Maria Smith, Vice President, Partnerships and Payments for Starbucks said:
“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.”
And while that is a good thing that Starbucks will be doing that, and hopefully other companies would join them, it is possible that it would take years for bitcoin to become mainstream. As we mentioned in our previous post, the price of bitcoin is just too volatile right now to be considered as a currency to use for payment in day-to-day situations, like paying for your coffee.
But once the price stabilizes, then it should be a viable option.
ICE also mentioned that bitcoin becoming a global currency will not fit into the crypto-anarchist vision the early adopters had. In fact, the reality will definitely be much different than they think.
According to Sprecher, bitcoin cannot just survive as a rogue idea. It cannot go against the government and all the traditional financial systems and still survive. That’s just not practical. Instead, it needs to run on already established infrastructures. It needs the trust and rules that have been built into our financial system for many years. Not only to prevent people from misusing bitcoin but also to have enough people trust in the currency to believe in it.
This is not a fan club that only a few people can enjoy. To become mainstream, bitcoin will need to be adopted by a majority of the people. Only then it will be considered as a legal tender.