Atlanta-based Intercontinental Exchange Inc. (ICE), the parent company of the New York Stock Exchange (NYSE), has announced that it plans to launch a digital assets platform and physically settled bitcoin futures product. (See also, How To Invest In Bitcoin Exchange Futures?)
The platform will be launched under a new company called Bakkt, which intends to leverage Microsoft cloud solutions to create an open and regulated, global ecosystem for digital assets. To bolster the use of cryptocurrencies and digital assets, Bakkt is working with leading organizations like the Boston Consulting Group (BCG), Microsoft Corp. (MSFT) and Starbucks Inc. (SBUX).
ICE Launces Digital Asset Platform
Consumer-facing partners like Starbuck are expected to play a key role in developing practical, trusted and regulated applications for public for them to convert their digital assets into U.S. dollars for use at Starbucks outlets.
By utilizing the trusted brand name and established marketplace infrastructure, the aim of this launch is to build an integrated trading system to allow consumers as well as institutions to buy, sell, store and spend various digital assets on a seamless global network.
“In bringing regulated, connected infrastructure together with institutional and consumer applications for digital assets, we aim to build confidence in the asset class on a global scale, consistent with our track record of bringing transparency and trust to previously unregulated markets,” said Jeffrey C. Sprecher, founder, chairman and CEO of Intercontinental Exchange.
ICE Bitcoin Futures will be Physically Settled
Bakkt's introductory launch will focus on allowing trading of bitcoin versus fiat currencies. By 2018, Bakkt will introduce a one-day physically delivered bitcoin contract along with physical warehousing, subject to U.S. Commodity Futures Trading Commission (CFTC) review and approval. It means that as a part of the settlement process of ICE-operated bitcoin futures, the bitcoins will be actually delivered on the specified date, unlike other present-day bitcoin futures products that are cash-settled. It is expected to bump up the market activity in bitcoins, as the futures traders will now be required to deliver actual bitcoin holdings.
The trading in the first ever physically settled bitcoin contracts will be based on new protocols that will be specifically established for managing the security and settlement requirements of digital assets. Bakkt will also finance a separate guarantee fund for the purpose. (See also: Four Problems With Bitcoin Futures.)
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