Decided to edumakate myself with a little weekend research on Bakkt and promptly fell into a rabbit hole.
Bakkt could certainly have a far larger near-term impact than Cboe or any others' ETF, as they are targeting both consumers and institutions in the same go. Having Starbucks as a partner could be a real game changer, the epitome of retail transaction exposure.
Also good to see some of the more disillusioned Wall Street veterans changing teams to root for crypto, and putting pressure on the SEC/CFTC to not fuck it all up.
Overall, I'm feeling more medium-to-long term bullish with Bakkt coming, although I think the year end price will end up as a wash. Hard to compete with the US midterm elections and other geopolitical turmoil, news wise. A rather inopportune time for Bakkt's release or a crypto bull run.
New Bakkt Venture Could Make Bitcoin As Mainstream As Starbuckshttps://www.forbes.com/sites/norbertmichel/2018/08/13/new-bakkt-venture-could-make-bitcoin-as-mainstream-as-starbucks/#57b98c7436c8Bitcoin Experts Pin Price Hopes On Early November -- Here's Whyhttps://www.forbes.com/sites/billybambrough/2018/09/04/bitcoin-experts-pin-price-hopes-on-early-november-heres-why/#599997702256Bitcoin Core Developer Joins Forces With Former Morgan Stanley Exec To Warn SEChttps://www.forbes.com/sites/michaeldelcastillo/2018/09/21/bitcoin-core-developer-joins-forces-with-former-morgan-stanley-exec-to-warn-sec/#7dd9ce435baf“We believe that current SEC rules surrounding custody do not reflect the risks inherent in managing digital assets and do not use the technical strengths of the technology. These technical strengths have the potential to lead to a stronger, more robust custody environment. To better understand these possibilities, to build to strengths of technologies, and to not harm its advantages, we recommend that the SEC engage with those who are experienced with technology, such as cryptographic engineers, software developers, Bitcoin exchanges, smart-contract designers, blockchain developers, and existing digital-asset managers to ensure best practices are implemented.”
Just a week after Caitlin Long, a co-author of the letter, first expressed similar concerns in an article on Forbes, Bakkt CEO Kelly Loeffler published a blog further elaborating on the planned cryptocurrency exchange services. In the post Loeffler clarified that the “bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset.” If the exchange follows the guidelines Loeffler laid out, it would put an end to many of the concerns expressed in the letter.
More articles from
Caitlin Long:
ICE Creating New Cryptocurrency Market: A Double-Edged Swordhttps://www.forbes.com/sites/caitlinlong/2018/08/03/ice-creating-new-cryptocurrency-market-a-double-edged-sword/#5f0b5ebb1015But it’s also a double-edged sword, because it’s likely the beginning of Wall Street creating financial claims to bitcoin out of thin air (and not backed by actual bitcoins), which could offset some of Bitcoin’s algorithmically-enforced scarcity.
Thankfully, for existing bitcoin investors, HODLers are likely to make that difficult by storing most bitcoins outside of the financial system and making it the epitome of “hard to borrow.”
Two Wall Street Terms Every Bitcoin Trader Needs To Learn Nowhttps://www.forbes.com/sites/caitlinlong/2018/08/13/the-r-and-c-words-enter-the-vocabulary-of-bitcoin-enthusiasts/#2ac0677a68f3The “R” and “C” words, rehypothecation and commingling, are as antithetical to how Bitcoin works as they are integral to how Wall Street works.
Three part series exploring building rivalry between cryptocurrencies and Wall St by same author, pretty enlightening perspectives:
ICOs Were 45% Of IPOs In Q2 2018, As Cryptos Disrupt Investment Bankshttps://www.forbes.com/sites/caitlinlong/2018/07/22/icos-were-45-of-ipos-in-q2-2018-as-cryptos-disrupt-investment-banks/#63cd8619794cCryptocurrency capital markets--which are less than 3 years old--are challenging the supremacy of traditional investment banks for raising new capital, as they raised 45% of the amount raised by traditional IPOs (initial public offerings) during Q2 2018.
Incumbents have been complacent about the rise of cryptocurrency markets and ultimately will not take this trend lightly.
Is Financialization A Double-Edged Sword For Bitcoin And Cryptocurrencies?https://www.forbes.com/sites/caitlinlong/2018/07/31/is-financialization-a-double-edged-sword-for-bitcoin-and-cryptocurrencies/#79a299402a20Will HODLers permit the financialization of cryptocurrencies?
So far, only the good type of financialization is happening in cryptocurrency markets. Leverage-based financialization is not happening—yet.
Racing To Fix Wall Street: ICE, Cryptocurrencies And Enterprise Blockchainhttps://www.forbes.com/sites/caitlinlong/2018/08/07/racing-to-fix-wall-street-ice-cryptocurrencies-and-enterprise-blockchain/#3f2e9033215eICE’s move renders many of Wall Street’s enterprise blockchain projects obsolete
Short of this, the SEC and CFTC should beware of the heightened risks with allowing clearinghouses, custodians and warehouses to hold cryptocurrencies in omnibus accounts. They instantly become “honeypots” for hackers.
The Bakkt Blog, CEO Kelly Loefflerhttps://medium.com/bakkt-blogWe’re taking a transparent approach to engage across the industry as we begin testing and onboarding in November, and trading and warehousing in December, subject to CFTC approval.
Our patent-pending market model is focused on mitigating risk while creating opportunities for institutions to serve their clients in a regulated framework for digital assets. This means creating a solution that both provides wanted exposure and limits unwanted exposure. A critical aspect of our model is ensuring that our clearing members are well protected from a risk perspective through a conservative market design, including:
o a requirement of full prefunding for all Bitcoin trades
o allowing clients to onboard directly to the warehouse, meaning that clearing members will not be required to handle cryptocurrency themselves, and
o a new, separate guaranty fund for Bitcoin, fully funded by Bakkt and ICE, helps ensure that non-defaulting clearing member capital is not at risk in the waterfall
These points should also eliminate misconceptions regarding commingling, leverage and rehypothecation, which are not features of our offering. We are committed to serving the market in a productive and secure manner as customer needs and regulatory frameworks evolve.
Moo(n).