On September 22, a product designed to remake Bitcoin as a mainstream investment for the world's investment managers will go live. When ICE Futures U.S., one of the world's largest commodities markets, opens trading at 8 p.m. ET that day, it will offer Bakkt Daily and Monthly Bitcoin Futures, the first physically delivered crypto-currency contracts ever traded on a federally regulated exchange.
If the exchange works as planned, it will give institutional investors a secure, well-monitored place to trade Bitcoin, the world's most widely used cryptocurrency. That in turn could help alleviate the problems with volatility and trustworthiness that have kept Bitcoin from being more widely adopted—giving the asset a major boost in legitimacy.
With the Bakkt futures, endowment funds or brokerage firms that trade the contracts will be able to channel their payments, and secure a guarantee that their Bitcoin will be delivered, through the same ICE clearinghouse that protects settles contracts traded by global oil giants. Their newly-purchased tokens will be stored in a super-secure warehouse overseen by the same team, deploying the same cyber-security measures, that safeguards their equity trades on the New York Stock Exchange.
The venture behind this effort to wed tradition and disruption, to bring blue-chip asset managers off the sidelines to embrace crypto-currencies, is Bakkt, so-called because it's "backed" by majority owner Intercontinental Exchange. ICE is the $52 billion-market-cap trading colossus that owns the NYSE; NYSE Arca, the world's largest platform for ETFs; ICE Futures U.S., one of the world's dominant players in agricultural commodities; and ICE Futures Europe, home of the Brent crude contract that's the leading benchmark for world oil prices. Bakkt is the brainchild of ICE's founder and CEO, Jeff Sprecher, long the leading figure in the transformation of major exchanges from open-outcry venues dominated by rowdy floor brokers t...