Read the article Bakkt: cryptocurrency of the New York Stock Exchange

At the Bakkt Digital Assets Summit held last week at the New York Stock Exchange, more than 150 investors around the world reached a consensus: There are already many institutional investors and venture capitalists ready to bring traditional assets into the world of cryptocurrencies.

This consensus is also the reason why the world's top investment institutions, such as Victoria Harbour Investment, bet on Bakkt. They are betting on the New York Stock Exchange in the next era.

“I looked at the blockchain industry up and down. Now it seems that there is no place for ordinary people to start a business and can clearly see the profit point.” A friend said today.

Indeed, compared to 2017, the world of cryptocurrency in 2019 has changed a lot. One of the big reasons is compliance. A great example is Bakkt, which has been hotbed up in the past two days. Founded in August 2018, the company received numerous amnesty platforms at the time of its creation, and even received about $200 million in financing at the worst market.

Is the market fancy this industry? No, there are many competitors from the traditional field in this industry, and there is no shortage of rookies entering the market. The reasonable explanation is to look at the market potential under "compliance."

The current cryptocurrency market is a market that is provoked by "compliance." On the one hand, Tether will conduct a hearing, BitMEX, the largest futures exchange in the digital assets, will be investigated; on the other side, ErisX and LedgerX will receive a license from the CFTC, and Seed CX will be licensed by the NYDFS. Every news about compliance will be interpreted by the market. At the same time, compliance and licensing indicate that the industry is moving from mature to mature.

Based on this, we need to get to know Bakkt which may become the "cryptocurrency NYSE".

01

Targeted by the world's top investment institutions

In August 2018, the New York Stock Exchange's parent company, the Intercontinental Exchange Group (ICE), established a new company called Bakkt. Bakkt will use Microsoft's cloud solutions to create an open and regulated global ecosystem of digital assets that consumers and institutions can seamlessly purchase, sell, store and use. Its first partners include well-known companies such as Microsoft, Starbucks, and Boston Consulting.

At the time, the market value of the entire digital currency was $270 billion.

Looking back, ICE chose to set up a subsidiary Bakkt at that time as a historical necessity. August 2018 is the eighth month after the digital currency has come down from the highest point, and it is also the four months before the digital currency reached freezing point (December 2018). On the way from the highest point to the lowest point, there will be countless people getting on and off the bus, and big companies are no exception – they are also staring at the cryptocurrency market, always ready to bet on the future.

As the pro-son of the Intercontinental Exchange Group, Bakkt was born with the blood of capital. The first round of $182.5 million in financing came from 12 institutions and individual investors: Boston Consulting, Li Ka-shing's Victoria Harbour Investment, South African Press Group's FinTech division and Protocol Ventures, Microsoft Venture Capital M12, Goldman Sachs Galaxy Digital, ICE, CMT Digital, Eagle Seven, Goldfinch Partners, Alan Howard, Pantera Capital, PayU.

You should know that Victoria Harbour Investment is an investor in famous technology companies such as Skype, Siri, Zoom, Facebook (invested $120 million in Facebook in 2007); South African Newspaper Group is Tencent's largest shareholder. Galaxy Digital and Pantera are top investment institutions in the cryptocurrency circle. It can be said that Bakkt's investors have gathered the world's top investment resources.

02

Top executive configuration

Bakkt management list

From the background of luxury shareholders, we may not know the importance of Bakkt. Let's turn our attention to its interior.

In terms of staffing, ICE gave the subsidiary Bakkt an over-specified treatment. Kakly Loeffler, CEO of Bakkt, is the wife of ICE CEO Jeff Sprecher, an ICE veteran who participated in the acquisition of the New York Stock Exchange and the New York Stock Exchange and the initial public offering of ICE.

In addition to the CEO, the management is also rich in industry experience and has a fascinating experience.

Adam White: Adam White joined Coinbase as Vice President and General Manager in 2013. He is the fifth employee of Coinbase and the highest level of executives, primarily in business development and product management.

After Coinbase co-founder and CEO Brian Armstrong learned that Adam was about to leave, he said: "In the past five years, Adam has helped us build our exchange business into the largest password trading venue in the US and continue to grow Coinbase. Global business and expand our culture to multiple offices."

From a job perspective, Bakkt's mission is just a platform for Adam to repeat what he has done before.

Rich Mackey: Prior to Bakkt, Rich served as Vice President of the independent futures broker Rosenthal Collins Group (RCG), founded in 1923. In 2018, when Marex Spectron acquired RCG, Bakkt also acquired some of RCG's assets, including Rich Mackey. Rich has served as President of RGS Subsidiary RGS, Vice President of RCG Senior Risk, Vice President of Strategy and Vice President. Rich Mackey will be the president at Bakkt and is one of the most suitable candidates for the location.

Matthew Johnson: Matthew is a board member of Digital Asset Research and a managing partner of LabCo NYC. Of course, his most important identity is the co-founder and chief product officer of Digital Asset Custody Company (DACC). DACC is a digital asset custodian and was acquired by Bakkt on April 29, 2019, and Matthew Johnson became Bakkt's vice president of blockchain engineering.

Encrypted currency is just an emerging industry. And why do the Intercontinental Exchanges with such a large business give such a high-profile staffing configuration to the new Bakkt?

03

Institutional investors have not yet entered, but they are ready for ammunition

Why is Bakkt so valued by the parent company ICE? One is the interest and the other is the strategic significance.

In terms of interests, the digital currency exchange can be described as a daily wage. The spot digital currency exchange currency volume in May and June 2019 was approximately $125 billion, and the second quarter net profit may reach $150 million. The futures digital currency exchange BitMEX has an annual turnover of more than 1 trillion US dollars, and the annual income will reach 2.5 billion US dollars according to the minimum 0.25% handling fee.

From the perspective of ICE, Bakkt has two strategic points.

The most important of these is the layout of the digital currency industry, which competes directly with other traditional financial institutions. CBOE (Chicago Options Exchange) launched the Bitcoin futures trading on December 11, 2017, and the CME (Chicago Mercantile Exchange) also launched futures trading accordingly. CME and COBE can be said to be a strong competitor of ICE in the traditional industry, and now take advantage of the opportunity, then for ICE, Bakkt is a business that cannot be launched. Even if Bakkt doesn't make money, ICE needs such a card.

BitMEX co-founder and CEO Arthur Hayes said in an interview: "This rise is still the result of retail investors. I compared the trading volume of CME and other exchanges, if institutional investors really believe in the prospect of cryptocurrency. They will buy the futures directly on the CME, and the open positions there will explode. They are definitely more likely to trade in a multi-billion dollar trading market, not a million-dollar market, so institutional investment It is entirely possible to buy bitcoin futures on the CME to make a profit, but they have not done so, which means that this is not of much value to them or traditional investors."

This is also enough to show that the digital currency futures exchange opened by traditional financial institutions is more able to gain the trust of institutional investors, which is undoubtedly a promising track.

It is worth noting that at the Bakkt Digital Assets Summit held last week at the New York Stock Exchange, more than 150 investors around the world reached a consensus: many institutional investors and venture capitalists are ready to bring traditional assets into The world of cryptocurrencies.

This consensus is also the reason why the world's top investment institutions, such as Victoria Harbour Investment, bet on Bakkt. They are betting on the New York Stock Exchange in the next era.

The second strategic point is to use Bakkt as a single entity to compete with digital currency exchanges such as ErisX, LedgerX, and Seed CX. Unlike CBOE and ICE, which are competing in person, ICE chooses to participate through subsidiaries.

04

a hearty cake, a group of powerful opponents

Bitcoin has been launched for more than a decade, and various derivatives tools have gradually improved. What is unique about Bakkt?

CME and CBOE futures are settled in US dollars, while Bakkt will be settled in Bitcoin. It can be argued that the bitcoin futures launched by CME and CBOE are arbitrage and hedging instruments that have less impact on the bitcoin spot market. The futures used by Bakkt are settled using bitcoin, which will have a big impact on the spot market. There is an expectation that the spot demand for Bitcoin will rise, which is one of the reasons why Bakkt is considered by everyone to be good.

Bakkt is also not a big one, and its competitors on the digital currency exchange are not too small.

ErisX: ErisX received a DCM license in 2011 and received a derivative clearing house license (DCO) from the CFTC (Commodity Futures Trading Commission) on July 1, 2019 to conduct Bitcoin futures trading. ErisX's shareholders are no less than Bakkt, including CBOE, Bitcoin, Fidelity Investments, Nasdaq Ventures, Monex Group and Pentera Capital. On July 18th, ErisX joined the Chamber of Digital Commerce, a political lobbying organization that includes heavyweights such as the R3 Alliance, Fidelity Investments, and Fidelity Investments.

LedgerX: LadgerX was approved by the CFTC on June 25, 2019 to conduct bitcoin futures settlement (DCM, contract market). Prior to this, LadgerX had been registered with the Exchange Operator (SEF) and the Derivatives Clearinghouse (DCO). On May 22, 2017, LedgerX received $11.4 million in Series B financing from Digital Finance Group and Miami International Holdings. Shareholders also include Hard Yaka, SV Angel, and Blockchain Capital.

Seed CX: Seed Cable's two subsidiaries, Seed Digital Commodities Market and Zero Hash, received a virtual currency license (BitLicense) from the New York Financial Services Department (NYDFS) on July 15, 2019. In 2018, Seed CX received $15 million from Bain Capital Ventures.

Futures trading with physical delivery generally involves three parts: "trusting", "transaction", and "liquidation". A DCO license can be used for the custody business, and a DCM license can be used for the clearing business. Bakkt itself has neither a DCO license nor a DCM license, so in 2018 it acquired a DACC with a DCO license. However, DCM is the most important license for Bakkt to use physical delivery.

Bakkt also tried the Seed CX in general and applied for a license license to the New York Financial Services Department to become a legitimate digital asset custodian. But as of now, it has not yet obtained this license.

However, from the news revealed by Bakkt, Bakkt is expected to get the license issue within two months. They have announced that they will be officially launched at the end of September.

A new era is coming, and cryptocurrencies are eating the financial world step by step. At this time, it took Xiaoyan to release his white paper, which took less than 11 years.

Compilation: Hydrogen 3

Editor: Jiang Xiaoyu

Produced: Carbon Chain Value (ID: cc-value)