Bakkt platform’s first offering? Physical crypto futures

Intercontinental Exchange (ICE), the company behind the New York Stock Exchange and startup crypto platform Bakkt, has announced its first product for the Bakkt platform—physical crypto futures.

The crypto futures, mainly in BTC, will be available to be traded against three separate fiat currencies, the U.S. dollar, the GBP and the Euro, respectively. Designed to attract institutional investors, Bakkt promises a “regulated ecosystem” for investing in cryptocurrency products, which will debut with the launch of the physical futures.

Announcing the futures product, the company described on Twitter how this would work for investors, noting, “For example, buying one USD/BTC futures contract will result in daily delivery of one [BTC] into the customer’s account.”

Crucially, the product is differentiated from exchange-traded funds (ETFs), which would enable investors to trade cryptocurrency markets without physically taking ownership of underlying cryptocurrency.

A number of crypto ETF proposals have been considered by the U.S. Securities and Exchange Commission (SEC) in recent months, despite none thus far being granted listing approval.

Several proposals remain under consideration by the SEC, but analysts believe the SEC cannot yet give approval to an ETF in the current regulatory climate. Physical crypto futures would aim to service the same market of institutional investors, but crucially delivers physical BTC tokens to investors, rather than a paper claim, as with ETFs.

Bakkt’s Tuesday announcement follows on from a statement of confirmation in August, when the firm clarified its position on margin trading, saying that they wouldn’t “serve to create a paper claim on a real asset.”

The platform has until now come in for criticism for the lack of apparent details around its offering, or how it would aim to attract institutional investors to the crypto space as envisaged. Bakkt’s most recent announcement will most likely go some way towards assuaging these concerns, as it gears up for its launch in November. If successful, the platform could provide a mechanism for institutional investors to take exposure to crypto markets, in the absence of an approved crypto ETF.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Leave crypto alone: Hester Peirce admonishes fellow regulators

The lone dissenter in the U.S. Securities and Exchange Commission (SEC) orders rejecting cryptocurrency exchange-traded funds (ETFs) called on the regulator to ease up on cryptocurrency-related products.

Commissioner Hester Peirce began her speech at a Cato Institute event in San Francisco with a disclaimer that her remarks were not to be taken as those of the commission, before launching into a plea for the SEC to be open to innovations in blockchain-based markets.

“We know we will be blamed when something goes wrong, and this fear leads to a default suspicion of risk-taking and a regulatory mindset that too often presumes that innovations designed to provide greater access to risk-taking are threats, both to our reputations and investor safety,” Peirce said.

She noted that the SEC decisions to deny ETF applications—currently under review—included a statement that the rejection was not based on an evaluation of the underlying assets, that is, cryptocurrencies. “The order, however, seemed to do almost that,” Peirce said. “It focused on the alleged flaws with Bitcoin markets, rather than on whether the exchange proposing to trade shares of the trust had taken steps to ensure the orderly trading of those shares.”

Peirce pointed out that much of the flaws of cryptocurrencies and related products were discussed openly. “What authority do we have to require that assets’ underlying securities be regulated as if they were securities? Even if we had this authority, private markets can and do regulate themselves. The crypto community includes lots of people who are very willing to speak up, criticize one another, and bring to light technological, corporate governance, and other perceived weaknesses in cryptocurrencies,” she said.

According to the SEC commissioner, cryptocurrency investments had to be made with care, just as any other investment. “Kleptocrypto is a new way of stealing from investors, but investors can protect themselves by exercising an old-fashioned dose of skepticism,” she said.

Risk, she noted, was a present factor in all investments, with people having differing appetites for it. “The SEC, as regulator of the capital markets, therefore should appreciate the connection between risk and return and resist the urge to coddle the American investor,” she said.

Rather than simply rejecting new financial products, Peirce said, “The SEC’s statutory mandates are much more modest. We are directed to protect investors, facilitate capital formation, and maintain fair, orderly, and efficient markets. In my view, this threefold mission requires the Commission to ensure that investors have access to products and services that enable them to construct investment portfolios that meet their needs.”

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Nasdaq makes $190M offer for Swedish crypto trading provider Cinnober

Nasdaq is set to acquire Sweden-based trading solutions provider Cinnober, in a deal that could see the stock exchange move into helping institutional investors gain access to new opportunities around cryptocurrency.

The move, announced last week, involves a $190 million all cash recommended public offer to Cinnober shareholders and warrant holders from Nasdaq. It plans to fund the acquisition with cash on hand or liquidity available under existing credit facilities.

It comes as the latest indication of Nasdaq’s growing interest in cryptocurrency trading and related services. Following the U.S. Securities and Exchange Commission’s (SEC) rejection of the latest Winklevoss crypto exchange traded fund (ETF) proposals, Nasdaq reportedly met with a panel of cryptocurrency experts to discuss ways of legitimising the sector, and of finding ways to placate the requirements of the SEC.

The acquisition will see Nasdaq take control of Cinnober, a firm with a reputation for bullishness around digital assets. Cinnober’s strategic partnership with cryptocurrency custodian BitGo also looks to be of interest to Nasdaq, for its appeal to institutional investors.

Custodianship has become an increasingly prominent issue amongst institutional investors, who are wary of deploying capital without solid security and custodial services in place.

With recent high profile hacks, including the Bancor exchange attack in June, some analysts have suggested these fears might be well placed. With its cryptocurrency custody service ready to go for institutional investors, the Cinnober acquisition therefore eliminates this barrier to market for Nasdaq in attracting institutional clients to invest in digital assets.

Nasdaq CEO and President Adena Friedman said the acquisition would allow the group to capitalise on new opportunities around cryptocurrencies and other digital assets.

“The combined intellectual capital, technology competence and capabilities of Cinnober and our Market Technology business will expand the breadth and depth of our fastest growing division at Nasdaq,” Friedman said in a statement. “This acquisition will enhance our ability to serve market infrastructure operators worldwide, and will accelerate our ability to expand into new growth segments.”

The acquisition comes at a time when large financial institutions are increasingly developing their custody services, with Bank of America and Citigroup announcing similar plans in recent months. Purchasing Cinnober will likely help position Nasdaq in this market, as well as marking their progress towards offering a more comprehensive lineup of crypto services.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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