Hey, you know that thing so many cryptocurrency enthusiasts are looking forward to, that thing that’s supposed to change the market and send prices skyward and give us another huge bull run, bringing in hundreds of billions of dollars from deep-pocketed financial institutions and investment companies in the United States?
It’s not happening. At least, it’s not happening on schedule.
Bakkt still does not have regulatory approval. On December 31, 2018, it delayed its opening indefinitely.
People have made a big deal about this since the beginning of the year. What does this mean for you, and what does this mean for the cryptocurrency market?
Nothing. Don’t read anything into it.
In December 2018, U.S. government shut down the Commodity Futures Trading Commission, the agency responsible for oversight of Bakkt’s initial financial product, bitcoin futures contracts. While U.S. law requires some CFTC staff to work unpaid during the shutdown, those public servants are focused on enforcement and oversight, not regulatory review.
There is literally nobody to approve Bakkt’s futures or issue guidance.
This shutdown has no end date. We don’t know when CFTC will reopen, much less when it will get to Bakkt’s futures offering. Bakkt is one of many important decisions in front of the agency (see for yourself at the CFTC website).
This delay indicates nothing about whether Bakkt will get approval. Do not listen to anybody who does not have first-hand knowledge of CFTC’s thinking.
If you’re antsy, take a few minutes to respond to CFTC’s RFI about ethereum-based tokens. Nobody will read your comments until after February 19, 2019 or the day the government reopens (whichever comes later), but at least you’ll have something constructive to think about.
Another word of caution about Bakkt-related reporting. Whenever you see a headline on any website, stay level-headed and relax. Read the actual article, then find some source that offers a contradictory opinion. For example, Bakkt raised a massive $180+ million in its first round of fundraising. That’s a staggering amount for any Series A, way above your $10 million average raise (not apples-to-apples comparison, just context).
This certainly indicates positive sentiment around Bakkt’s proposed exchange and its chances of making money for itself and its backers. Great news. Let’s look a little closer, shall we?
That money comes from crypto-friendly businesses and VC funds that have close connections with companies that want Bakkt to succeed. It’s like if you started a professional baseball team with money raised from your rich golfing buddy, a few wealthy retired ballplayers, a baseball-themed restaurant, a beer company, and a baseball bat manufacturer. Your team could very well succeed, but I’m not going to make any conclusions about your chances based on who’s backing you. They all have lots of cash and an interest in seeing you succeed. Of course they’re going to give you some money.
Also remember Bakkt is not the only player here. CoinFLEX and NASDAQ plan to offer the same product and other entities are moving into the space. Bakkt gets a lot of attention because it has a bold vision, big ambitions that go way beyond futures contracts, and a highly-regarded, world-renowned parent company that has a long history of success. Lots of potential to change the cryptocurrency markets substantially…in time. Right now, though, it’s just one of several efforts to make money from people who want to speculate on cryptocurrency.
In the coming weeks and months, I’ll publish posts about Bakkt and the whole idea that institutional money will flood the crypto markets. I’ll also share my thoughts on both matters.