ICE to form a bitcoin market

Intercontinental Exchange (ICE), the owner of the New York Stock Exchange (NYSE), announced on Friday that they will list a physically-settled bitcoin futures contracts and form a new digital assets company whose mission is to make bitcoin a mainstream financial asset.

The Atlanta-based firm said it was partnering with several blockbuster companies on the new project, including Boston Consulting Group, Microsoft and Starbucks Corp to enable consumers and institutions to buy, sell, store and spend digital assets on its global network. The platform will initially be used for trading and conversion of bitcoin versus fiat currencies, ICE said.

The new platform has been named Bakkt and it will leverage Microsoft Corp’s cloud solutions to build "an open and regulated, global ecosystem for around $270 billion digital asset marketplace," according to a press release.

Bakkt will integrate with the ICE’s U.S. futures market and clearinghouse to list a physically-settled one-day bitcoin futures product, complete with physical warehousing managed in-house by ICE. This means bitcoin will actually be delivered on a specified date, unlike other offerings that are settled with cash. This product will launch in November, pending U.S. Commodity Futures Trading Commission (CFTC) approval, ICE states.

ICE did not give a launch date for the company and said further details would be announced in the coming weeks.

Because ICE — one of the biggest names in finance — will serve as custodian for all assets stored on the Bakkt platform, institutional investors such as pensions, endowments, and insurance companies may be less hesitant to take a bet on this burgeoning asset class. Analysts and others with knowledge of the institutional investing landscape had consistently fingered a lack of a respected, regulated custodian as the primary reason that institutions were staying away from bitcoin.

The company said that it believes that the regulated venues will create new protocols for managing "the specific security and settlement requirements" of cryptocurrencies.
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