Thomas Lee is the Head of Research at Fundstrat Global Advisors. He just explained on Twitter the reasons for which he believes that institutional investors will find buying Bitcoin via ICE/Bakkt a more viable alternative compared to existing crypto exchanges such as Binance and Coinbase.
ICE recently announced the launch of their company Bakkt
Back on 3 August 2018, the parent company of the New York Stock Exchange NYSE, Intercontinental Exchange (TCE) revealed the launch of a brand new company called Bakkt.
What’s so important about this company is that it would be building “an open, seamless global network to enable you to buy, sell, store and spend digital assets simply, safely and efficiently.”
The ICE press release reports that one of Bakkt’s first products is set to be a fully-regulated Bitcoin futures product:
“As an initial component of the Bakkt offering, Intercontinental Exchange’s U.S.-based futures exchange and clearinghouse plan to launch a 1-day physically delivered Bitcoin contract along with physical warehousing in November 2018, subject to CFTC review and approval. These regulated venues will establish new protocols for managing the specific security and settlement requirements of digital currencies.”
Bakkt’s official website states that in November ICE Futures U.S. and ICE Clear U.S. will launch the first physically delivered Bitcoin futures and warehouse in collaboration with Bakkt. This will result in enabling access for institutional investors via regulated market infrastructure.
Thomas Lee’s reasons
Thomas Lee believes that it’s better for institutions to buy such 1-day Bitcoin Futures contracts via ICE/Bakkt compared to spot exchanges such as Binance.
For starters, he believes that ICED already has existing and approved trading relationships with significant banks.
3/ ICE already has existing and approved trading relationships with banks like @jpmorgan and brokers @Fidelity@CharlesSchwab etc and means that this is a natural pathway for traditional retail investors to access Bitcoin via their brokers. ICE is owner of @NYSE
He also says that ICE is the counterparty to the trade and has massive financial resources.
4/ ICE is the counterparty to the trade (just as @coinbase and @binance are counterparties if u use them). ICE has tremendous financial resources with revs $6 billion (financials https://t.co/uUlViK2W2E) and $85 billion in assets. As a custodian/counterparty, money good.
Lee notes that the approval for this futures product is something that has to be done by the U.S. Commodity Futures Trading Commission (CFTC) and not the U.S. Securities and Exchange Commission (SEC).
5/ Bakkt is doing 1-day settled futures and not spot, because this entity is under the purview of the @CFTC (and #cryptodad@giancarloCFTC) and if it was spot, it would be @NewYork_SEC (not positive but I believe this is the case).