The Intercontinental Exchange, the operator behind the New York Stock Exchange, has announced that it is creating a new company called Bakkt that will hold and manage people’s cryptocurrency. The platform will be powered by Microsoft cloud tech and plans to begin with trading and converting bitcoin to US dollars and other fiat (government-backed) currencies as “bitcoin is today the most liquid digital currency.”
Bakkt represents a significant marker for cryptocurrency. The NYSE and its operator are trusted financial institutions, while cryptocurrency, though it has seen some successes, has been marred by hoaxes and even reports of price manipulation. These problems have been so rampant that in May, the SEC launched a fake initial coin offering in order to warn people against fraudulent cryptocurrencies.
While Bakkt should lend legitimacy to cryptocurrency as a whole, bitcoin’s price is currently at around $7,500 at the time of writing, far below its nearly $20,000 peak just seven months ago. That price becomes even more sobering in the light of a new report by Swiss investment bank UBS which states that bitcoin’s price would need to hit nearly $213,000 for it to replace US money supply. “Our findings suggest that bitcoin, in its current form, is too unstable and limited to become a viable means of payment for global transactions or a mainstream asset class,” the report found.
Notably, companies like Starbucks have signed up to start accepting cryptocurrency through the network offered by Bakkt, even through Starbucks’ mobile app. Earlier this year Starbucks’ founder Howard Schultz said blockchain tech had “potential,” but at the time the company wasn’t interested in bitcoin. “I don’t believe that bitcoin is going to be a currency today or in the future,” he stated during Starbucks’ quarterly investor call. “I believe that we are heading into a new age, in which blockchain technology is going to provide a significant level of a digital currency that is going to have a consumer application.”
Bakkt says it is preparing for launch and more operational details will be announced in the coming weeks. It plans to begin offering services in November, but will need approval from the US Commodity Futures Trading Commission to introduce futures trading. The US CFTC has been known to crack down on bitcoin scams in the past. However, if all goes as planned, the system could provide a safer, more stable option for bitcoin down the line.