A Coinbase Veteran Is Changing Sides in the Cryptocurrency Wars

A prime architect of America’s largest trading platform for digital currencies is changing teams. Adam White, who helped build Coinbase into a crypto-colossus with 25 million customers, is joining Bakkt, the venture launched in August by a consortium led by Intercontinental Exchange (market cap: $42 billion), parent of the New York Stock Exchange, as chief operating officer.

Bakkt, with its deep ties to Wall Street’s institutional investing titans, is pitching itself as the venture with an inside track at bringing Bitcoin mutual funds and ETFs to America’s 401(k)s.

The announcement came on the morning of October 15 via a post on the blogging platform Medium from Bakkt CEO Kelly Loeffler. For sixteen years, Loeffler worked alongside ICE’s founder and chief Jeff Sprecher, who’s also her husband, to assemble a highly regulated, mainstream trading empire for equities, ETFs, and commodities ranging from Brent crude to cotton. The ICE exchanges are go-to venues for Wall Street. (For more, read “The NYSE’s Owner Is Launching a Startup Exchange for Bitcoin.”)

The news of White’s hire was reported previously by cryptocurrency news site The Block. A Coinbase spokesperson told Fortune, “We wish Adam all the best, and are proud of what we call the ‘Coinbase Mafia’—an increasingly impressive group of alumni who are driving the crypto space forward.”

A competition heats up

White’s move to Bakkt is the latest signal that Old School finance intends to be a leader in transforming Bitcoin and other digital tokens into liquid, widely trading global currencies.

Until very recently, cryptocurrency trading has been dominated by New School startups such as Coinbase, which originally catered primarily to individual retail investors. More recently, old guard and new guard alike have been competing to serve better serve institutional traders, aiming to get the major asset managers, hedge funds and family offices trading Bitcoin, say, on the same scale they swap stocks and commodities. Earlier this year, as Fortune recently reported, Coinbase passed a milestone, as trading volume from its institutional clients began exceeding retail trading for the first time. (Read “Coinbase Wants to Be Too Big to Fail.”)

Both Bakkt and Coinbase, along with other crypto startups, are gearing up to serve institutional customers. Bakkt has an edge, for the moment, because it will provide what today’s venues are lacking and what Wall Street craves: Trading on federally regulated exchanges, as well as clearing, and custody of services for digital assets on par with the safeguards that now protect transactions for the major money managers.

In his first interview about the move, White spoke to Fortune about his reasons for making the move that many crypto-purists may see as siding with the establishment. White was Coinbase’s fifth employee and served for the past eighteen months chief of its institutional products arm. “I had a front row seat for the last couple of years watching the money managers’ and other big investors’ evolving views of cryptocurrencies,” White said.

For White, it was clear that Wall Street was ready to package digital assets for the masses––especially since cryptocurrencies strongly appealed to millennials. “In 2017, I saw a big shift,” he says. “The interest in Bitcoin and other currencies started changing from retail to the institutional side. But the level of infrastructure of the existing trading sites often didn’t meet their expectations. That’s why they’re waiting on the sidelines.” The big banks, says White, needed exchanges that provided the safety equivalent to what they enjoyed in trading equities, bonds or gold. “That’s why I joined Bakkt,” says White.

Bear market be damned

White says that the recent market trends give the false impression that investor interest in cryptocurrencies is waning, when in fact institutions are hungrier than ever. Since last December, Bitcoin’s price has dropped from $19,000 to $6,200, and the total market value of all digital currencies has shrunk by 70% to roughly $200 billion. “Far too often the public looks at price and market size to determine the progress in digital currencies,” says White. Instead, White looks at what he considers the fundamentals, trading volumes, and progress in technology.

“Cryptocurrency markets go their own way, we see bull and bear markets,” he says. “But what matters is that the number of daily transactions for all cryptocurrencies is up year over year. And we’re also seeing the introduction of new protocols from open source software developers that make cryptocurrencies far easier to use.” He cited one example: the Liquid Network, an app unveiled just last week that executes transactions instantaneously, eliminating the customary 10-minute delay between the time customers make a purchase and when it’s confirmed on the blockchain.

For Bakkt’s Loeffler, the current, fractured state of cryptocurrencies is reminiscent of the energy markets in ICE’s early days. “The digital market is fragmented like the energy market in the early 2000s. ICE was the pioneer attracting more and more institutions to trade energy, which is what created today’s liquid market,” she says. “We’re about to see a revolution on the same scale in cryptocurrencies.”

Right now, Loeffler expects Bakkt to offer institutions access to a full package of regulated trading, clearing, and custody in December on the ICE Futures U.S. commodities exchange, subject to approval by the federal Commodity Futures Trading Commission.

It’s instructive that White, a trailblazer in bringing digital currencies to shoppers, is embracing the trading establishment epitomized by ICE. If Bakkt delivers as Loeffler and White expect, and big Wall Street begin trade cryptocurrencies with the same ease, safety, and scale as stocks, bonds and traditional commodities, it could be a tremendous forward leap in the evolution of cryptocurrencies.

UPDATE: The story has been updated to link to the story in which the news of Adam White’s hire was first reported.