Business World

Thursday 19 September 2019

NYSE parent's bid to offer Bitcoin-paying derivatives gets given the green light

New York Stock Exchange traders. Photo: Michael Nagle/Bloomberg
New York Stock Exchange traders. Photo: Michael Nagle/Bloomberg

Ben Bain

Intercontinental Exchange (ICE), the parent of the New York Stock Exchange, won an approval that clears the way for its Bakkt unit to allow investors to buy derivatives that pay out with Bitcoins for the first time.

The New York State Department of Financial Services on Friday granted a charter to Bakkt Trust Co. to hold custody of customers' tokens. The futures had already been given a green light from the U.S. Commodity Futures Trading Commission under a self-certification process. The first contracts will be offered on September 23rd.

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"We believe that the availability of a benchmark that can be referenced globally will create confidence in the true price of Bitcoin," Kelly Loeffler, Bakkt's chief executive officer, said in a telephone interview. "It's an important step in creating more trust."

Despite its status of the world's most valuable cryptocurrency, Bitcoin is known for wild price swings that some say are the result of manipulation. Digital tokens trade on platforms that face far less regulatory scrutiny than exchanges for stocks or derivatives. Many of the venues are also located outside the US.

According to Loeffler, the fragmented nature of Bitcoin trading means that there's a lack of confidence of prices. She said that ICE's futures contracts will lead to a new one-year price curve for Bitcoin that traders can use to express views on the cryptocurrency as they would with other asset classes.

Bitcoin erased losses of as much as 6pc to trade at about $10,400 (€9,369) after the announcement having dropped about 13pc this week. It traded around $7,400 when the the venture was first announced.


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