Intercontinental Exchange (ICE), the operator of 23 leading global exchanges including the New York Stock Exchange (NYSE), has announced plans to create a Microsoft cloud-powered “open and regulated, global ecosystem for digital assets,” according to a press release published August 3.
The operator of NYSE is forming a new company, dubbed “Bakkt,” and will work alongside a marquee group of enterprises that includes BCG, Microsoft, Starbucks, and others, to create the new ecosystem.
The intention is to create an integrated platform that enables consumers, merchants, and institutional clients to buy, sell, store, and spend digital assets on a “seamless global network,” the press release notes.
First use cases will be for trading and conversion of Bitcoin (BTC) against fiat currencies, which ICE notes is currently “the most liquid cryptocurrency.” This conversion into fiat will enable consumers to purchase any item at their local Starbucks, in what will be crypto’s debut with the popular chain.
The ecosystem is expected to include “federally regulated markets and warehousing” alongside “merchant and consumer applications”:
“As an initial component of the Bakkt offering, Intercontinental Exchange’s U.S.-based futures exchange and clearing house plan to launch a 1-day physically delivered Bitcoin contract along with physical warehousing in November 2018, subject to CFTC review and approval.
These regulated venues will establish new protocols for managing the specific security and settlement requirements of digital currencies. In addition, the clearing house plans to create a separate guarantee fund that will be funded by Bakkt.”
By mobilizing trusted market infrastructure, ICE says it intends to design Bakkt to “support transaction flows” in the $270 billion digital asset marketplace, and facilitate its “secure” and “efficient” evolution.
Investors in the Bakkt ecosystem are expected to include Microsoft’s venture capital arm, Mike Novogratz’s Galaxy Digital, Alan Howard, Pantera Capital, and Susquehanna International Group, LLP, among others.
The news confirms sources in May that had suggested the NYSE operator was considering launching physically-delivered BTC futures contracts, distinct from those currently offered on CMEand CBOE that are ultimately settled in fiat. Analysts said at the time that physical delivery would open “the floodgates” to institutional capital and potentially result in some “big price moves” in the crypto markets.
This chimes with Mike Novogratz’s recent estimation that “a trusted, name custodian — [such as] a Japanese bank or HSBC or ICE or Goldman Sachs — [is what would ultimately] allow institutional investors to feel comfortable.”