Described as a new company “designed to bring digital assets to the mainstream,” one which will “help unlock the potential of this important technology”, Bakkt has drawn considerable attention as a potentially important step in the widespread adoption of crypto-technology by individuals and businesses.
Bakkt hopes to make the “wider application of digital assets a reality” for consumers and institutions looking for “federally regulated, institutional trading.” On the positive response to the news, Bakkt CEO Kelly Loeffler noted the “widespread need” for “trusted infrastructure for trading, storing and spending digital currencies.”
In order to serve this market need Bakkt will be implementing what it describes as a “consistent regulatory construct”, transparent pricing and institutional-grade infrastructure.
No margin trading
Perhaps the most notable update is that Bakkt will not be offering their clients the facility to trade on margin. Loeffler identifies “price discovery” as “a fundamental part of advancing the promise of digital currencies.” Without trustworthy pricing, cryptocurrencies are doomed to remain on the fringes.
Bakkt believes that the physical delivery of digital assets is critical to ensure accurate price discovery. Therefore its customers will have to fully fund their trades. According to Loeffler, this will support “market integrity” as well as distinguishing the platform from “existing futures and crypto exchanges which allow for margin, leverage and cash settlement.”
Though the market capitalization of digital assets is down 70% on its peak value, Loeffler notes that ICOs, venture capital involvement in the crypto space, and “corporate R&D related to blockchain and digital assets” are all set to exceed their 2017 levels. For Bakkt this shows “a strong appetite for this market and technology,” an appetite it is keen to satisfy.
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