In a move that could go a long way toward mainstreaming Bitcoin, the Intercontinental Exchange (ICE) – the parent company of the New York Stock Exchange – announced that it is launching a new company called Bakkt to create an open and regulated, global ecosystem for digital assets.
In a press release, ICE said that it is expected to launch a physical Bitcoin futures contract and warehouse this November.
As an initial component of the Bakkt offering, Intercontinental Exchange’s U.S.-based futures exchange and clearing house plan to launch a 1-day physically delivered Bitcoin contract along with physical warehousing in November 2018, subject to CFTC review and approval. These regulated venues will establish new protocols for managing the specific security and settlement requirements of digital currencies. In addition, the clearing house plans to create a separate guarantee fund that will be funded by Bakkt.
The company indicated that its “first use cases will be for trading and conversion of Bitcoin versus fiat currencies” because Bitcoin is currently the most liquid digital asset.
“Bakkt is designed to serve as a scalable on-ramp for institutional, merchant and consumer participation in digital assets by promoting greater efficiency, security and utility,” Kelly Loeffler, ICE’s head of digital assets and CEO of Bakkt said in a statement. “We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce.”
In order to get its ecosystem off the ground, Bakkt is bringing in some A-List partners – including Microsoft, Starbucks and the Boston Consulting Group – “to create an integrated platform that enables consumers and institutions to buy, sell, store and spend digital assets on a seamless global network.”
Other investors in Bakkt along with ICE and M12 – Microsoft’s venture capital arm – include Fortress Investment Group, Eagle Seven, Galaxy Digital, Horizons Ventures, Alan Howard, Pantera Capital, Protocol Ventures, and Susquehanna International Group, LLP.
“In bringing regulated, connected infrastructure together with institutional and consumer applications for digital assets, we aim to build confidence in the asset class on a global scale, consistent with our track record of bringing transparency and trust to previously unregulated markets,” Jeffrey C. Sprecher, founder, chairman and CEO of Intercontinental Exchange, said in a statement.
Bakkt’s plans are bigger than just future’s contracts: Fortune reports that the company is aiming to eventually crack the 401(k) and IRA markets, especially with young millennials entering the workforce.
In an exclusive interview, Loeffler (pronounced “Leffler”) told Fortune that ICE and its partners have been “building the factory” that will power Bakkt in the strictest secrecy for the past 14 months. The name of the company was only decided in the past two weeks. Loeffler explains that “Bakkt” is a play on “backed,” as in “asset-backed securities,” and it’s meant to evoke a highly-trusted investment.
If the Bakkt blueprint works as planned, a panoply of new Bitcoin funds would tap the pent-up demand for the cryptocurrency, making it a safe and easy choice for everyday investors—notably millennials getting their first 401(k)s. Wall Street could then tap Bitcoin’s popularity as an alternative to stocks and bonds to generate giant trading volumes. And that flood of institutional buying and selling, in turn, would take the terror out of Bitcoin by smoothing its wild swings in price.
ICE has not disclosed how much its investors have poured into the project. You can get updates on the launch of Bakkt here.
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