NYSE Owner to Launch Cryptocurrency Exchange, Physical Bitcoin Futures

Intercontinental Exchange, the parent company of the New York Stock Exchange, along with coffee giant Starbucks, Microsoft and BCG are developing an online platform, dubbed “Bakkt,” to buy, sell, store and spend cryptocurrencies.

Georgia-based Intercontinental Exchange, or ICE, will launch a futures exchange for digital assets that will include the first regulated, physically-delivered bitcoin futures contracts next November. The mainstream, established futures exchanges, including those run by Cboe Global Markets and CME Group, already offer bitcoin futures, but they are cash settled, meaning the actual cryptocurrency does not change hands.

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But the new operations at ICE, which will announce further details in the coming weeks, would provide a direct access to the cryptocurrency by putting the actual Bitcoins in the customer’s account at the end of the trade. However, there have been concerns that the cash-settled process can be manipulated more easily.

Pending the US regulators’ review and approval, the news is another example of a traditional Wall Street firm diving into the nascent market for virtual coins.

The Bakkt venture will leverages Microsoft cloud solutions and ICE’s expertise to create a federally regulated ecosystem along with merchant and consumer applications. Its first use cases will focus on Bitcoin trading and exchange against fiat currencies.

The exchange operator said in a statement: ”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.”

Maria Smith, VP of partnerships and payments at Starbucks, added: “As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks. As a leader in Mobile Pay to our more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for our customers.”