In order to be successful according to conventional wisdom, one must have certain positive attributes, market awareness, and a plan for resource deployment and management, but, even if these stars line up correctly, timing is everything. The Intercontinental Exchange Inc. (ICE), the owner and operator of the New York Stock Exchange, has been trying to get its Bakkt crypto futures exchange out of the starting blocks for months, but CFTC “red tape” has necessitated two implementation delays. In the meantime, Bakkt has managed to buy digital assets at depressed prices, as it prepares for its official public launch date.
As was reported back in December:
The mastermind behind Bakkt is none other than Jeff Sprecher, head of the Intercontinental Exchange (ICE), the world’s premier stock exchange operator. Sprecher’s spouse, Kelly Loeffler, will be the project’s CEO. She is currently the head of ICE’s digital assets department. Bakkt will immediately bring to the effort an assortment of “Big Players” in the field of emerging consumer Fintech, like BCG, Starbucks, and Microsoft.
In other words, Bakkt is to be a “leading edge” crypto exchange, the only one of its kind, with all the bells and whistles that will satisfy institutional players and regulators, alike. As reported:
Bakkt will also integrate consumer and institutional applications in a seamless, regulated manner, thereby providing the transparency and trust expected by both groups. Bitcoin futures with custodian services will also be part of the first phase of operations, subject to the approval of the Commodity Futures Trading Commission.
Delays have been a problem. A potential launch date at this stage appears to be the middle or latter part of 2019. There remain technical details to be worked out between both New York State and the CFTC in order to comply with various laws that rule over all commodities businesses, which include cryptos and related derivatives. Work is in progress by all participants to speed up the process. For example, Bakkt is seeking a license from New York State, presumably to address custody issues and the need to have a separate trust company.”
There is also another issue, buried in the inner workings of a clearinghouse, “a necessary intermediary in the derivatives markets that deals directly with buyers and sellers.” The issue pertains to risk sharing by members of the clearinghouse. In order to “settle in kind”, the Bakkt exchange must retain an inventory of digital assets on hand, and then the related holding period, whether days, seconds, or weeks, can create risk, especially if the asset has a history of price volatility in the market. Cryptos have earned a reputation for being the most volatile asset class in history.
Timing, however, has looked favorably upon Bakkt. It is now building an inventory for future use and acquiring crypto related firms at prices that would never had happened, had it not been for Crypto Winter. Bakkt recently purchased cryptocurrency custodian service company Digital Asset Custody Company. Jeff Sprecher noted:
We’ve actually looked at a number of different companies and acquired a company earlier this week that wouldn’t have been available to us if the market had been really hot.
Meanwhile, as others have noticed:
While Bakkt has garnered substantial interest from both institutional investors and the broader commerce market, the exchange has experienced a series of delays.
The good news is that the Bakkt management team is preparing for launch, i.e., it continues to build out the executive team by hiring top of the line; build out other departments by recruiting high quality development, marketing, and operations staff; and, lastly, invest resources in the firm’s infrastructure at the best possible market prices. As for the CFTC, the license will come, once all “t’s” are crossed.