On August 16, Bakkt CEO Kelly Loeffler posted on Medium, announcing that Bakkt will be officially launched on September 23.

It states in the text that it has been approved by the CFTC through the self-certification process and that user acceptance testing has begun.

This also means that the much-anticipated Bakkt is about to officially launch a physical delivery bitcoin futures contract.

Previously, Bakkt was delayed twice due to qualification issues, and has finally achieved compliance recently. This time, Bakkt will no longer be postponed.

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1. Bakkt background

The most striking background of Bakkt is its parent company Intercontinental Exchange Group (ICE), which owns 14 securities and futures exchanges including New York Stock Exchange, Euronext, London International Financial Futures Exchange, and 5 The clearing house is top-notch in energy and experience in the field of compliance exchanges.

Bakkt is ICE's first and very important move in cryptocurrency deployment. It can be seen from the fact that the CEO of Bakkt is the wife of the ICE CEO and a veteran employee of ICE, and ICE has configured ultra-high specifications for Bakkt. executive team.

The importance of Bakkt can also be reflected from the side. Bakkt’s first round of financing of US$180 million came from 12 institutional and individual investors, including Victoria Harbor Investment, South African Press Group, Microsoft Ventures M12, Galaxy Digital, Pantera Capital and so on. top institutions.

Horizons Investment is owned by Li Ka-shing, and is an investor in famous technology companies such as Skype, BitPay, and Facebook; South African Press Group is the largest shareholder of Tencent; and there are also top investment institutions in the blockchain field. And its first batch of partners include well-known companies such as Microsoft, Starbucks, and Boston Consulting.

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2. Why Bakkt has been postponed again and again

The postponement of Bakkt is determined by its characteristics. Bakkt is a compliant exchange and must be bound by various qualifications. It has not been able to fully meet the requirements before, so the launch time has been postponed repeatedly.

Futures trading with physical delivery generally involves three parts: custody, trading, and clearing.

Both Bakkt's trading and clearing are carried out using the parent company's infrastructure, the transaction is carried out by ICE Futures US (futures exchange), the clearing is carried out by ICE Clear US (clearing house), and the custody is carried out by Bakkt itself.

According to Qitao Capital MPC, since the custodian is not ICE, Bakkt is an external institution. In this case, the custodian must be a state-regulated trust or a state-chartered bank regulated by the Office of the Comptroller of the Currency. Bakkt did not meet this requirement before. one standard.

According to the official information published on Medium this time, with the approval of the New York State Department of Financial Services (NYDFS), Bakkt will establish a qualified custodian — Bakkt Trust Company (Bakkt Trust Company).

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3. The meaning of Bakkt

Due to its luxurious background, Bakkt has received enthusiastic attention from the market, and has high expectations for it, believing that it will detonate a larger bull market.It is believed that it will provide an unimpeded channel for institutional entry, which will allow a large amount of funds to enter the encrypted world.

There are two main features of Bakkt, one is full compliance, and the other is physical delivery.

There were not no compliant futures exchanges before. The CBOE (Chicago Options Exchange) and CME (Chicago Mercantile Exchange) launched at the end of the last bull market were both compliant exchanges, but the market entered a downward channel after their launch.

Although it cannot be said that CBOE and CME caused the market decline, the non-physical delivery bitcoin futures they provide, which can be shorted without bitcoin, are also considered by some to be one of the reasons for accelerating the market decline.

The reason why Bakkt is highly anticipated is the physical delivery on the basis of compliance. Short selling is no longer unlimited, and physical delivery must be carried out when it expires. This will prompt a part of Bitcoin assets to be deposited in the exchange. relevant.

In addition, if institutions enter the market on a large scale, their trading volume will be quite large, and the amount of deposited bitcoins will also be quite large, and the demand for bitcoins in the spot market will continue to increase. This is why the market generally believes that Bakkt will be able to bring about a bull market. reason.

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4. Will there really be a large number of institutions entering the market?

The entry of institutions has been mentioned countless times this year, and it is not an exaggeration to call this year the first year of entry of institutions.

Previously, the Blockchain Institute had published two articles"Institutional Running Entry:Who, why, what, what impact?》、"Bitcoin broke through $10,000, but there is only one reason why it can bring about a super bull market"Discuss news related to the entry of institutions.

The entry of institutions mentioned earlier refers to various institutions, not just investment funds. In fact, various institutions have entered the market in various ways, such as in"Institutional Running Entry:Who, why, what, what impact? "asset allocation

asset allocation

Investment roles: funds, family offices, endowments, pension plans

Investment Forms: Venture Funds, Hedge Funds and Direct Investments

traditional financial institution

traditional financial institution

Investment roles: custodians, exchanges, brokers, asset managers and banks

Investment Forms: Trading and Execution Services, Custody, OTC

Examples: Fidelity, ICE (Bakkt), JPMorgan, DRW

Fintech Fintech

Investment roles: technology-focused, financial services provider

Investment Forms: Brokerage Services, Portfolio Management

Examples: Robinhood, Square, SoFi

payment company

Investment roles: credit card companies, payment processors, money transfer services

Investment form: strategic investment through venture capital and partners

social media

social media

Investment Role: Messaging App, Social Networking

Form of Investment: Wallet Infrastructure, Tokens

Examples: Facebook Libra, Telegram, Kakao

software company

Investment roles: SaaS, infrastructure

Investment Forms: Enterprise Blockchain, Supply Chain Use Cases, Identity

Examples: Microsoft, Salesforce, IBM, Amazon

What is certain is that a large number of institutions did enter the market in 2019, but these institutions are not exactly the same as those mentioned for Bakkt. The institutions mentioned for Bakkt refer more to investment institutions that manage a large amount of assets. The capital giants who stirred up the boundless situation.

but as in"Bitcoin broke through $10,000, but there is only one reason why it can bring about a super bull market"As discussed in , there is no doubt that institutions will enter the market, and the entry of investment institutions is also certain. Perhaps the investment of some institutions in the short term can indeed boost the upward trend of cryptocurrency prices.

But in the end, the decisive factor that determines whether investment institutions enter and what proportion of entry is the willingness of the customers behind the investment institutions. If their customers are unwilling to make encrypted investments, the institutions cannot make encrypted investments, and it is the customers behind the institutions that decide The willingness to invest can only be determined by the degree to which cryptocurrencies are accepted by the public.

But these problems can all be solved in Bakkt,As a fully compliant and regulated futures trading platform, although the risk of hacker attacks still exists, the use of insurance mechanisms can try to cover this part of the risk, which is exactly what Bakkt does. Policy uncertainty and tax issues no longer exist here at Bakkt.

Bakkt is also a good place for institutions to store cryptocurrencies. The significance of a regulated custody platform to the industry is by no means just a platform for compliant futures trading. (It is also possible to make a prediction here that most oracle services will use the prices provided by compliant exchanges Bakkt, rather than the prices of existing spot exchanges).

For investment institutions that really want to invest in cryptocurrencies, the attraction of Bakkt is obvious. From this logic, Bakkt has its own unique features for attracting investment institutions.

Bakkt does have the capital and conditions to bring a big bull market, but there is another question to consider. Compared with cryptocurrencies, the size of investment institutions is extremely large, and the investment is also very professional. Are they carrying funds for charity?

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Disclaimer: This article is the author's independent point of view, and does not represent the position of the Blockchain Research Institute, nor does it constitute any investment opinion or suggestion. The picture comes from the Internet.

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Disclaimer: This article is the author's independent point of view, and does not represent the position of the Blockchain Research Institute, nor does it constitute any investment opinion or suggestion. The picture comes from the Internet.