Bitcoin Global News (BGN)
April 22, 2019 -- ADVFN Crypto NewsWire -- When moon now seems to
relate less to the overall crypto prices and more to the launches
of platforms like Bakkt. Unlike the crypto craze of 2017, it would
seem that over time, the blockchain industry has become less
fraught with wild speculation and more focused on real-world use
cases that could elevate the industry’s user base to new
heights.
Arguably, this shift in focus could
not come at a better time as events like the de-listing of certain
assets like Bitcoin SV have raised questions about the scope of
crypto exchanges’ power. For one, where does their influence
stop?
Consider how we buy our crypto now.
Almost every purchase is made on an exchange and most users use
cryptocurrencies specifically for trading or “Hodling” and nothing
else. Perhaps the best example of this are statistics like those
that were posted by the Bitcoin Market Journal in February of this
year.
Reportedly, as of December 2018,
only around 32 million Bitcoin wallets were live and of those
wallets, 7.1 million were actually being used. When considered
alongside the power of crypto exchanges, what these numbers tell us
is that the blockchain industry is very early-stage and needs more
use cases that help it to scale.
Right now, those who know of crypto
at all, likely know it for its’ trading utility. If an effort like
Bakkt could finally go live, the number of people that are
interested in cryptocurrencies and become actively involved in them
might change skyrocket. If you don’t already know, Bakkt is a
platform that aims to be the one-stop shop for institutions to get
involved in cryptocurrencies.
What is hoped is that since
interested businesses will be able to store, trade, and convert
cryptocurrencies to fiat all in one place. This includes being able
to trade in Bitcoin futures-contracts. Most importantly, since
Bakkt has been created by the parent company of the New York Stock
Exchange, they likely do have connections with regulators that will
help them to cover all of the necessary bases in a legal
sense.
If you’re wondering why crypto
enthusiasts would eagerly await the launch of this project,
consider the fact that Bakkt has predicted they will essentially
create a new $270 billion market for crypto. Since, judging by
Coinmarketcap, the current total market cap of all cryptocurrencies
is only about $180 billion, this would represent more than a
doubling of the industry’s total liquidity.
The problem is: regulators just
can’t seem to make up their mind about Bakkt. According to
CoinDesk’s latest report, this comes down to Bakkt’s goal of
holding client assets in-house, while also clearing trades
in-house, which means they would control essentially every aspect
of the market they create.
Perhaps agencies like the SEC and
the CFTC fear some sort of monopoly? Though little information
seems to have been gleaned from both the regulators involved and
Bakkt itself at this time, CoinDesk reached out to Chris Giancarlo
and gained some insights on the matter.
Reportedly, one of the biggest
stumbling blocks for Bakkt is how the CFTC is used to regulating
futures. Apparently, when any business that trades in futures
operates in the United States, it is considered to be a derivatives
market, which means the custody of its’ assets is handled by
certain government agencies. In other words, an institution that
wants to facilitate the trading of futures contracts while also
holding the assets involved, needs to be fully regulated by law. As
Coindesk notes via Giancarlo, since Bakkt reportedly is not, this
would mean that the CFTC would have to set a precedent or an
“exception” for it.
In the end, until this central
issue is solved in a way that satisfies both the CFTC and Bakkt, it
is likely that the widely heralded futures exchange platform will
not be launching anytime soon.
By: BGN Editorial Staff