On Monday (15 October 2018), Kelly Loeffler, the current CEO of the Bakkt exchange, announced via a post on Bakkt’s Medium blog that Adam White, a former Vice President & General Manager at Coinbase, would be joining Bakkt as the Chief Operating Officer (COO) in November. As part of an interview with Fortune, she said that the “digital market is fragmented” and that we were “about to see a revolution on the same scale in cryptocurrencies.”
Loeffler, who is also the Chief Communications & Marketing Officer at Bakkt’s parent company, Intercontinental Exchange (ICE), said that, last weekend, she and White had given an interview to Fortune’s Shawn Tully.
Bakkt, which was announced by ICE, a global operator of exchanges, including the New York Stock Exchange (NYSE), in August 2018, is launching its crypto trading platform in November, the same month that White will be joining Bakkt. With regard to the launch, Loeffler said:
“… we’re hard at work with members and customers preparing for it. Our exchange and clearing house boards — and the clearing house risk committee — have all reviewed and approved the respective rules. We plan to file these rules publicly with the CFTC for review and comment very soon. We’re taking a transparent approach to engage across the industry as we begin testing and onboarding in November, and trading and warehousing in December, subject to CFTC approval.”
She said that their “patent-pending market model” is “focused on mitigating risk while creating opportunities for institutions to serve their clients in a regulated framework for digital assets.”
Next, she addressed some of the concerns expressed by Caitlin Long, a 22-year Wall Street veteran who has been active in the crypto space (mostly, Bitcoin) since 2012, regarding “commingling, leverage and rehypothecation”, which she said were not part of their offering:
“A critical aspect of our model is ensuring that our clearing members are well protected from a risk perspective through a conservative market design, including a requirement of full prefunding for all Bitcoin trades; allowing clients to onboard directly to the warehouse, meaning that clearing members will not be required to handle cryptocurrency themselves; and a new, separate guaranty fund for Bitcoin, fully funded by Bakkt and ICE, helps ensure that non-defaulting clearing member capital is not at risk in the waterfall.”
White, who was Coinbase’s fifth employee and for the past 18 months worked as the head of the institutional investments division, explained to Fortune his reasoning for joining Bakkt:
“I had a front row seat for the last couple of years watching the money managers’ and other big investors’ evolving views of cryptocurrencies…
In 2017, I saw a big shift… The interest in Bitcoin and other currencies started changing from retail to the institutional side. But the level of infrastructure of the existing trading sites often didn’t meet their expectations. That’s why they’re waiting on the sidelines… That’s why I joined Bakkt.”
He then added that rather than look at “price and market size to determine the progress in digital currencies”, like many retail investors do, he focuses on trading volumes and technological progress (such as Blockstream’s Liquid Network):
“Cryptocurrency markets go their own way, we see bull and bear markets,. But what matters is that the number of daily transactions for all cryptocurrencies is up year over year. And we’re also seeing the introduction of new protocols from open source software developers that make cryptocurrencies far easier to use.”
Loeffler says that although the crypto market is “fragmented”, in the same way that “the energy market in the early 2000s” was prior to ICE getting involved, additional liquidity introduced by institutional investors will allow us to soon “see a revolution on the same scale in cryptocurrencies.”
Featured Image Courtesy of Bakkt
