Bakkt Trading Platform Could Spark Institutional Interest

As the cryptocurrency community continues to vie for the attention of Wall Street, new platforms for day trading are being released every day. These trading tools are primarily used to try to gain the support of institutional investors. Gaining access to this big money would be huge for Bitcoin, a currency which has long existed outside of the accepted norm for financial trade in the economic and exchange sectors.

But the outlook has been less than promising for cryptocurrencies in 2018. Aside from the massive price crash and struggle to recover experienced by even the strongest and most consistent of coins, this year has also seen the outright rejection of several applications to host a Bitcoin ETF, or an Exchange-Traded Fund. While these ETFs would have attracted even more Wall Street money to the Bitcoin trading markets, their rejection has meant that the cryptocurrency sector must find new and exciting ways to entice the interest of institutional investors who, in many ways, hold the key to a confirmed bull market.

Bakkt is a global digital assets platform which was started by an unlikely coalition between Starbucks, Microsoft and Intercontinental Exchange (ICE) on the New York Stock Exchange (NYSE). Plans to start the new exchange platform were announced earlier in August, and the community is abuzz dissecting and discussing what the new “on-ramp for investors” might do for the price of currencies—and for the future of the markets.

Bakkt was started by Starbucks and the New York Stock Exchange, a coalition which has been christened by Starbucks announcing that they would be willing to allow customers to purchase their goods using various digital currencies in order to jump-start interest on and participation in the platform. Aside from Starbucks, the collaboration also boasts big names like Microsoft and BCG, who will help with the technical side of the operation.

At its core, Bakkt is supposed to function as an “on-ramp” for a variety of market participants that have been previously unacquainted with the cryptocurrency markets. By emphasizing security, ease of user-interface, and efficiency, the scalable platform will function as a one-of-a-kind institutional exchange in a desperate bid to gain hold of the institutional investors which exchanges like the NYSE already have.

According to the CEO of the LMAX Exchange, David Mercer, Bakkt has one feature in particular that just might be enough to bring in droves of new institutional investors—their 1-day futures contracts. These unique contracts, as the name might suggest, expire after just one day. However, they are also unique in their method of profit delivery.

When the contract expires after a day, it doesn’t deliver cash or a theoretical “IOU” to the trader, but instead provides them with physical Bitcoin. Typically, a trader would be forced to pay for the difference or reap the difference between the price at which they bought the coin and the price that the transaction eventually settled at. But with physical Bitcoin remuneration in the process, the trader is paid the difference in Bitcoin.

This is important, according to the executive, because it forces the infrastructure facilitating the trade to actually transfer cryptocurrencies. Additionally, he argued that it would require that the CFTC, the regulatory authority for physical commodities in the United States, sign off on the process before it hits the market.

In this regard, Bakkt is ready to fight the good fight. Their corporation has actually begun working on both the procurement of a physical warehouse and the legal tools necessary to apply for CFTC approval in November of this year.

Whether they succeed or fail, there is no doubt that significant weight is being thrown around behind Bakkt—and it is weight in favor of institutional adoption.

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