ICE-Owned Bakkt Raises $183M, Delays Launch of Bitcoin Futures

The latest funding round is being led by ICE, Microsoft’s venture capital arm, M12, PayU, and other nine investors.

Bakkt, a cryptocurrency platform owned by the New York Stock Exchange owner, announced today a massive Series A funding round that could value the company at over $1 billion.

Bakkt CEO Kelly Loeffler revealed the $182.5 million investment in a Medium post, saying the startup has secured the new venture capital from 12 partners and investors that “believe in the future of digital assets,” and will be used to accelerate its expansion.

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The latest funding round is being led by Boston Consulting Group, CMT Digital, Eagle Seven, Galaxy Digital, Goldfinch Partners, Alan Howard, Horizons Ventures, Intercontinental Exchange, Microsoft’s venture capital arm, M12, Pantera Capital, PayU, the fintech arm of Naspers, and Protocol Ventures.

Intercontinental Exchange, along with Starbucks, Microsoft, and BCG, is backing the new company that will facilitate bitcoin futures trading by the first quarter of next year.

The Bakkt venture will leverage Microsoft cloud solutions and ICE’s expertise to create a federally regulated ecosystem along with merchant and consumer applications. Its first use cases will focus on Bitcoin trading and exchange against fiat currencies.

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ICE pushes back debut date

In a separate announcement, Georgia-based Intercontinental Exchange, or ICE, said the proposed launch date of its Bitcoin’s first physically-delivered contract had been delayed for the third time to a new, undisclosed date.

The initial launch was set for November 2018, but the company announced last month it would push that debut back to January 24, 2019, subject to regulatory approval.

The established futures exchanges, including those run by Cboe Global Markets and CME Group, already offer bitcoin futures, but they are cash settled, meaning the actual cryptocurrency does not change hands.

But the new operations at ICE, which involves the transfer of the cryptocurrency instead of cash, would provide direct access to the digital asset by putting the actual Bitcoins in the customer’s account at the end of the trade. This allows market makers to effectively hedge their exposure across multiple exchanges. And as for security issues, there have been concerns that the cash-settled process can be manipulated too easily.

So far, the US regulators have not allowed cryptocurrency-based ETFs on the CBOE or elsewhere, partly because of concerns around the unregulated aspect of the virtual asset class. Still, putting physical-settled contracts on a highly scrutinized US exchange could convince its regulators to allow more advanced products such as exchange-traded funds.

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