The entire industry seems to be looking forward to the launch of Bakkt, which was first announced as a trading and custody platform for bitcoin in August. The CFTC already has a proposal, including an exemption from Bitcoin custody for future contracts. Although at the end of last year the commissioners were presented with this proposition, it is back at their desks, which does not look like a good sign.
Adam White, ICE’s Bakkt’s Chief Operating Officer, spoke about Bakkt’s regulatory clarity since its inception. White has said, Bakkt and ICE’s main advantage is that ICE takes opaque objects and commodities and creates regulatory clarity. It did it with energy, it did it with credit, and now with crypto, it is planning to do it.
One thing not realized by many people is that most regulations are based on partnerships Originally planned to start Bakkt in mid – December, ICE, the parent for the New York stock market. Then it was repressed to the end of January. The launch was then delayed for the New Year’s Eve, and the ICE stated its previous Jan. 24 target “will be amended in accordance with the process and timeline of the CFTC.” Usually, when these proposals are on the CFTC desks, they are subjected to a mandatory public review of 30 days, but at the moment nothing seems to happen.
The exchange does not have a way to start its proposed future contract until the CFTC approves it, which only occurs after the review period. The Bakkt COO further added that the organization enabled people in the regulatory space to understand technicalities such as “what a hard fork is and what a deep chain de-org. is”. According to him, regulators are going to move at an acceleration with which they are comfortable, which in turn has meant the startup rate between ICE and Bakkt.
As the first quarter of the year is almost over, the proposed public comment exemption still needs to be released. Although the proposed proposal has been released today, it will not be launched until at least mid – April, because the public will have to review and comment on the proposal for 30 days. The project was still under examination at the end of last month.
Although the five-week shutdown has clearly not helped, it is not the only part of the delay. Analysts say that Bakkt’s plans are ambitious in their nature because future contracts could be manipulated, which is a major issue for contracts with a cash settlement.
An unnamed former CFTC employee said future commodity exchanges would usually involve a service provider such as a bank or trust. As the clearinghouse determines, the provider would administer the custody.
Right now, Bakkt seems to be working with its systems to build the product. Kelly Loeffler, the CEO, said two months ago that the company was working on select assets from Rosenthal Collins Group, a futures commission merchant. Former employees belonged to the assets and the following month was completed.