The world’s largest exchange operator says it is seeing demand from a range of institutional clients including traditional asset managers for its new digital asset platform.
The Intercontinental Exchange (ICE) recently delayed the launch date of Bakkt – its digital asset ecosystem – to January 2019, due to what the venue’s chief executive Kelly Loeffler described as ‘positive indicators’ as the pipeline has filled up with customers.
Speaking at Consensus: Invest, hosted by CoinDesk in New York, Loeffler was asked who the clients were that the exchange is seeing demand from.
“We’re connected institutionally around the world to the largest traders of all asset classes, so it’s that customer base, it’s the new emerging crypto customer base and then we’re getting inbounds from folks we might not have reached out to, traditional asset managers,” she said, adding that the delay will give more time to help people onboard.
ICE’s US-based futures exchange and clearing house plan to launch a one-day physically delivered Bitcoin contract along with physical warehousing. Both Loeffler and ICE CEO, Jeffrey Sprecher, were speaking at the conference and highlighted that their model is based around providing a regulated price discovery process ‘free from fraud and manipulation’.
“Today there is not a regulated physically delivered price discovery contract in the market,” said Loeffler. “Think about commodities, equity indices, the S&P500, that price is established in a federally regulated market, we don’t have that in the crypto market today.”
She added that Bakkt will allow investors to trade Bitcoin the way they trade crude oil.
Bringing a familiar feel to investors used to operating in the traditional markets appears to be a major part of ICE’s strategy with Bakkt. As an example, Sprecher highlighted the importance of using a clearing house in the process, which should appease the worries of regulators.
“We’re going to trade this product and then send it through our clearing house,” he added. “A clearing house guarantees delivery and payment and the way it does that is that it will be pre-funded at the clearing house so there will be no leverage risk.
“A clearing house is governed by risk committee, the risk committee is made up of all the major banks and brokers in the US. The approval we are getting is the institutional community of the US has already approved all these rules and now we have been able to take that body of work to the US government and say ‘you have the backing of all these institutions’ who have validated this rule book.”
During the conversation, Loeffler added that she and Sprecher had been planning this project since 2014. When asked about the dropping price of Bitcoin, Sprecher said he was agnostic on the price, but did have this to say on the future of cryptocurrencies
“Will digital assets survive? I’d say the unequivocal answer is yes.”