The NYSE Bitcoin Exchange
Daily Fintech, Llias Louis Hatzis | August 6, 2018
International 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.
The International Exchange (ICE) is working on a Bitcoin trading platform that would allow investors to directly buy and hold Bitcoin without the involvement of futures, derivatives or other kinds of contracts.
The global network will be known as Bakkt and aims to build an open, seamless global network to enable investors to buy, sell, store and spend digital assets simply, safely and efficiently. It will connect investors, merchants and consumers, making it easier, faster and more cost-effective to access, trade and use digital assets. Microsoft and Startbucks have signed on as partners.
Our take: The news from NYSE comes just days after a Goldman Sachs executive publicly confirmed that the bank intends to enter the Bitcoin market by launching a futures market within weeks.
Goldman Sachs, CME, CBOE and other financial institutions that have already integrated Bitcoin on their platforms or are planning for the future, have either developed or are developing a futures market based on Bitcoin. None of the platforms deal with Bitcoin directly. Essentially, Goldman Sachs will offer its clients contracts mimicking the value of Bitcoin however the clients will not be able to hold or buy Bitcoin directly.
ICE’s cryptocurrency plans could play a significant role in helping crypto mature and draw more interest from traditional financial institutions. Specifically, it will allow banks to buy swap contracts that will end up with customers owning bitcoin the next day. This method of trading will provide institutions with the security of using the established exchange. In addition, swaps are already regulated by the Commodity Futures Trading Commission (CFTC).
This is game-changing. Individuals would be able to add Bitcoin to their IRA or 401k. It will open up access to millions of people who have been sitting on the sidelines not able to add Bitcoin to their portfolios. While ETF’s will happen, now they have become less imperative, because with Bakkt, anyone will be able to buy and sell Bitcoin.
If that wasn’t big enough there is a second layer to this news. The direct involvement of brands like Microsoft and Starbucks is huge, as Bakkt will begin by offering Bitcoin-fiat conversion for consumers to purchase everyday goods with crypto. Potentially we could see BTC rolling out to many other major retailers.
But despite NYSE’s big news for Bitcoin, crypto markets plummeted. A day after the announcement markets took a plunge, with Bitcoin (BTC) dipping below $7,000 and all of the top ten cryptocurrencies in the red.
The willingness of big industry players to associate themselves with Bitcoin is welcome news. When the largest stock exchange, which settles trillions of dollars has opted for a crypto exchange, it validates the market. However, it does not diminish regulatory concerns, nor does it come without the possibility of squeezing out innovative first-movers, as the NYSE venture have a big leg up over existing crypto-exchange venues.
For now, it looks like Wall Street’s biggest companies and getting on board and developments like this can help cement the future of the cryptocurrency.