A report from the Abacus Journal suggests that JP Morgan is gearing to deliver clients to Bakkt, the upcoming cryptocurrency exchange owned by the Intercontinental Exchange (ICE) who also own the New York Stock Exchange. They will very soon launch a service whereby they will offer physically settled Bitcoin futures contracts. Their service is scheduled to launch on December 12th and institutional investors are already waiting to buy.
Speaking to two staffers at JP Morgan’s global headquarters, the Abacus Journal reports that first impressions are in – and they’re bullish about the platform.
According to one staffer,
“Bakkt provides a clear and clean regulatory construct to engage with Bitcoin. No smoke and mirrors. No regulatory risk. No outsized legal risk. Our compliance and legal team have done a deep dive on Bakkt and our integration/execution protocols. It all works and it all works better than what we expected. The custody solution is the real story there and is ultimately what has provided us the bandwidth (legally) to offer options to clients. If I was forced to disclose where we are headed, take a look at the products that Goldman has become comfortable with and that is what we seem to be comfortable with at this time. Not confirming any product or offering, but I can speculate that we will have a trading desk and that clients will be able to access Bitcoin, via Bakkt, in some way shape or form.”
A second JP Morgan staffer agrees that Bakkt can service institutional clients but that retail clients remain off limits in the immediate future.
“There are two digital asset teams internally and the focus has been on what Bakkt has proposed and how to adequately leverage it for institutional clients. I think we are a long way from offering anything to retail clients. That would clearly be in direct competition to Jamie’s (Dimon) public statements. But Bakkt offers an easy pathway to offer institutional clients access that gives us legal and risk comfort. My very educated guess is that we offer trading capabilities within our commodities and forex space that includes Bitcoin via Bakkt. Given that all of the legal and compliance due diligence is all but done, we should see volumes begin and increase here (with respect to Bitcoin trading) as Bakkt ramps up. Where products and services go in the digital asset space from there will take on a life of its own. You can imagine that we aren’t necessarily considered ‘first movers’ in banking. But that’s because we don’t have to be. Still, our leadership likes Bakkt and are comfortable with what they are set to bring to market.”
Bakkt is still awaiting the approval from the Commodity Futures Trade Commission (CFTC). If granted this means that the first federally regulated, physical delivery price discovery contract for Bitcoin will enter the market, opening the door to Wall Street.