The Intercontinental Exchange Inc. (ICE), the parent company of the New York Stock Exchange (NYSE), is facing resistance from authorities over its proposed plan to create a highly regulated bitcoin ecosystem to attract institutional investors.
The project, better known as Bakkt, is still awaiting an operating license from the Commodity Futures Trading Commission (CFTC). Although initially scheduled for October 2018, the launch was pushed back to March this year. Then in February, ICE’s CEO Jeff Sprecher said the plan is to launch it later in 2019.
“So it’s a bit of a moonshot bet and it’s been organized in a manner that is very different than the way ICE typically does businesses […] They’re well along in building out an infrastructure that I think you’ll see launch later this year,” said Sprecher.
Today, Bloomberg is coming out with more details as to why Bakkt hasn’t received its license yet. Accordingly, the CFTC is concerned over Bakkt’s plans to store clients’ funds in the context of security.
As a part of the proposal, Bakkt has proposed to hold custody of customers’ tokens. In general, storage of funds and protection from theft and manipulation is one of the biggest concerns that regulators have when discussing multiple bitcoin exchange-traded fund (ETF) proposals.
However, Bloomberg reports that Bakkt’s proposal differs slightly from the others as the Atlanta-based company seeks to use bitcoins, and not USD, to pay out expired one-day contracts. Bakkt will also be used as an exchange in order to allow businesses, such as already subscribed Starbucks or Microsoft, to exchange crypto assets to fiat.
Hence, Bakkt is working to enable “consumers and institutions to buy, sell, store and spend digital assets on a seamless global network”. However, as per regulation, Bakkt doesn’t have a license to deposit customer funds at a bank or trust company.
Meanwhile, Bakkt’s CEO Kelly Loeffler provided an update on the current state of play.
“While we’re not yet able to provide a launch date, we’re making solid progress in bringing the first physical delivery price discovery contracts for Bitcoin to the U.S., where price formation will occur in federally regulated, transparent markets.”
This week, Newconomy reported that Bakkt hired Mike Blandina, the former PayPal and Google expert, in the position of Chief Product Officer.