Bakkt, launched by New York Stock Exchange parent company Intercontinental Exchange [ICE], is back in the cryptoverse. The CEO of Bakkt, Kelly Loeffler said that they will be serving institutions with infrastructure for cryptocurrencies as their first step.
Loeffler said that ever since ICE announced the launch of Bakkt, they have come to realize the flaws in the market state for Bitcoin and other virtual currencies. In her opinion, markets evolve over time to establish a certain value, act as a facilitator for commerce, and “instill confidence in forming prices”. The CEO said that Bakkt was formed on this foundation.
Furthermore, Kelly highlighted that Bakkt will be working on addressing the unique requirements of their clients, shareholders and also regulated institutions. She added:
“Our goal is to make digital assets more liquid, trusted and accessible; allowing meaningful innovation to follow.”
Moreover, Kelly discussed how Bakkt’s approach was different in comparision to other platforms who were trying to achieve the same thing. She spoke on three-points namely, new products on existing infrastructure, new security standards and new access to markets and information.
On the topic of new products on existing infrastructure, the CEO stated it would be a difficult task to launch a new product which is based on a new emerging technology. She further added that the company believes in the need for closing a gap between the “frameworks for mainstream asset classes and digital assets.”
In order to achieve this, Kelly said that Bakkt will be using the available futures market infrastructure which is time-tested and regulated to create a physically delivered Bitcoin [BTC] and warehousing to global markets. She said:
“This includes consistent standards for compliance, with anti-money laundering and know-your-customer rules, market surveillance, and reporting standards at the federal regulation level, subject to final review and approval by the U.S. CFTC”
The CEO said that the Bitcoin futures contract will be paired with fiat currencies such as USD, GBP, and EUR. According to her, the delivery of the physical Bitcoin futures “adds to the utility” of Bitcoin.
While speaking about New Security, Kelly revealed that the foundation’s warehouse design incorporates a high level of physical, technological and informational security.
Regarding the financial security, Kelly said:
“While the purchases and sales of Bitcoin in our futures market will be pre-funded, which virtually eliminates the risk of default, the clearing house will gain a separate guaranty fund, funded by Bakkt, which is dedicated to the segregated Bitcoin assets of Bakkt’s clients.”
Kelly said that Bakkt will not be relying upon the agreements put forth by the International Swaps and Derivatives Association [ISDA] that are used in the Over the Counter [OTC] swaps markets. She further stated that the existing futures infrastructure that provides a wide range of trading and risk management tactics will serve as a layer 2 on the blockchain and facilitate smooth connection for institutions.
Kelly claims that Bakkt’s regulated physical delivery market is architectured to offer information in real time and provide greater efficiencies in terms of transactions.
She concluded by stating:
“While there are many aspects of Bakkt that we’ll continue to develop and share, our initial focus is supporting regulated institutions in serving customers in this emerging asset class. The foundation on which we are building our solutions for buying, selling, storing and spending digital assets is not a piece of Italian Carrera marble, like the statue of David, but is built upon the time-tested, regulated futures markets — which have advanced markets ranging from coffee to gold for hundreds of years.”
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