How ICE Bakkt Crypto Platform Could Lead to Poor Banking Practices Inside Ecosystem

ICE’s “Bakkt” Might Bring Poor Banking Practices To Crypto Ecosystem

Intercontinental Exchange [ICE] recently announced the development of ‘Bakkt’ which Wall Street professional considers a concerning factor. A Wall Street veteran, Caitlin Long with previous experience at pension solutions of Morgan Stanley for 22 years has expressed her views on this issue in an article.

Long has stated that the development of ‘Bakkt plans’ by ICE, the operator of New York Stock Exchange would not only launch a brand new Bitcoin market but also beckon bad practices to the domain of cryptocurrency.

Positives of Bakkt Launch

Long spoke on financialization in crypto, describing two forms of financialization, one of which improves liquidity through new investors like institutional investors and is beneficial to the crypto space.

“This is a major step in the mainstreaming of bitcoin and cryptocurrencies. But it’s also a double-edged sword because it’s likely the beginning of Wall Street creating financial claims to bitcoin out of thin air (and not backed by actual bitcoins), which could offset some of Bitcoin’s algorithmically-enforced scarcity. Perhaps that’s why bitcoin’s price declined slightly after today’s announcement by ICE.”

Some of the other advantages are as follows:

  • attracting institutional investors to cryptocurrencies
  • solve the custody problem that has kept many institutional investors in the sidelines all along. Now there is a qualified custodian which the SEC requires for investment advisers that manage $150 Million or more
  • help regulators become more comfortable with the sector once they see ICE involved
  • it will attract corporate issuers to raise capital using the Bakkt ecosystem. Cryptocurrencies offer issuers the prospect of covenant-free and preference-free capital at low cost

Negatives of Bakkt Launch

“Wall Street’s only shot at controlling cryptocurrencies is to financialize them via leverage—by creating more financial claims to the coins than there are underlying coins and thereby influencing the underlying coin prices via derivatives markets. Financial institutions [will begin] to create claims against cryptocurrencies that are not fully backed by the underlying coins (which could take the form of margin loans, coin lending/rehypothecation, coin-settled futures contracts, or ETFs that don’t 100% track the underlying coins at any given moment). None of these are happening in the market yet, though.”

Long fears that ICE, the owner of the New York Stock Exchange (NYSE), will be a key player in the financialization of Bitcoin and other cryptocurrencies, and that the results may not be pretty. ICE will be launching a physically-backed bitcoin futures contract, as well as a full-featured “bitcoin market.”

She didn’t mince words when it came to the statements made by ICE CEO Jeffrey Sprecher, stating that he doesn’t have a good understanding of the cryptocurrency.

“It was odd for the CEO to talk about bringing trust and transparency to Bitcoin, when Bitcoin doesn’t need either because it has already achieved both.”

Long did conclude on a positive note, giving credit to HODLers.

“There’s reason to be optimistic, thanks to HODLers, because bitcoin is an equity-based asset that can only be financialized if holders bring their coins into the financial system.

Bitcoin already has trust and transparency precisely because no centralized institution controls it. Thankfully, for existing bitcoin investors, HODLers are likely to make that difficult by storing most bitcoins outside of the financial system and making it the epitome of hard to borrow.”

Get Free Email Updates!

*Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

I will never give away, trade or sell your email address. You can unsubscribe at any time.

Avatar
Bitcoin Exchange Guide News Team
B.E.G. Editorial Team is a gracious group of giving cryptocurrency advocates and blockchain believers who want to ensure we do our part in spreading digital currency awareness and adoption. We are a team of over forty individuals all working as a collective whole to produce around the clock daily news, reviews and insights regarding all major coin updates, token announcements and new releases. Make sure to read our editorial policies and follow us on Twitter, Join us in Telegram. Stay tuned. #bitcoin

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

LEAVE A REPLY

Please enter your comment!
Please enter your name here

3,466FansLike
2,795FollowersFollow
4,237FollowersFollow

Live Bitcoin Price & Latest BTC Charts

Today's Latest Crypto News

Bitfinex Offers $400M Reward For Info on 120k BTC Stolen in 2016; Hackers Can Collect Too

On August 2, 2016, Bitfinex experienced one of the biggest crypto heists of all time, as hackers exploited the system, running off with approximately...

Crypto Trading Platform, 2gether, Unable To Refund $1.4M Hack; Offers Its Native Tokens

Spanish cryptocurrency trading app, 2gether announced on Sunday the platform faced a hack on July 31 on its investment coffers losing €1.183 million ($1.4...

Venture Fund to Invest Majority of $100 Million Raised Fund in DeFi Protocols

San Francisco-based venture fund Electric Capital has raised $100 million from university endowments and other non-profits and it will be using this to invest...

Filecoin to Begins its Incentivized Testnet This Week Ahead of Project Launch Next Month

Crypto project Filecoin which proposes to create a peer-to-peer storage system, will begin its incentivized testnet this week. This testnet will allow users to...

Ethereum 2.0 Final Testnet, Medalla, Rolls Out; Is A 2020 Launch Now In Sight?

The Ethereum 2.0 Phase 0 Medalla public testnet finally went live on August 4, 2020 at around 1AM GMT giving hope of a possible...

BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.

Start Using Crypto Today