3 steps Bakkt will take to become a ‘regulated institution’
In a blog post of September 18, Kelly Loeffler, CEO at Bakkt, revealed the project’s intended steps to address the “unique requirements of regulated institutions, their clients and stakeholders.”
According to the chief executive, Bakkt takes advantage of the time-tested, existing, and entirely regulated infrastructure of the
futures market. However, the platform will introduce a new product – physically delivered Bitcoin as well as warehousing to global markets.
It’s exactly this new product that Bakkt is introducing that causes some to believe that it will essentially make a Bitcoin ETF redundant.
All aspects of the existing futures market, including institutional-grade onboarding and compliance will, for the first time, be part of physical delivery and warehousing of Bitcoin.
What is more, according to the CEO, the solution will be subjected to final review and approval by the US CFTC.
According to Loeffler, Bakkt will also introduce strong Bitcoin warehouse design and financial security. The platform will have a guaranty fund, entirely funded by Bakkt, which will purportedly eliminate the risk of a default.
“…while the purchases and sales of Bitcoin in our futures market will be pre-funded, which virtually eliminates the risk of default, the clearinghouse will gain a separate guaranty fund, funded by Bakkt, which is dedicated to the segregated Bitcoin assets of Bakkt’s clients,” the CEO explains.
Loeffler makes the case that participation requirements of larger financial institutions are dramatically different from those of retail investors.
Purportedly, Bakkt will use the
trading and risk management applications available in the existing futures ecosystem to streamline market access for institutions. The platform is also attempting to provide a solution for the fragmented cryptocurrency market and the high cost of entry.
“The availability of Bakkt’s regulated physical delivery market price is designed to offer more information in real-time and greater transaction efficiency,” addsLoeffler