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ICE stands for intercontinental exchange. They are the parent company of the New York Stock Exchange (NYSE). They announced yesterday that they have been secretly building Bakkt - a new ecosystem that will supposedly bridge the gap between institutional investors and crypto - for the past ~11 months. 

They are pending CFTC approval for their launch of a a regulated bitcoin futures contract and warehouse in November of 2018. 

Bakkt is a great example of how large financial institutions are getting over the idea of fighting against the “crypto current” and are instead trying to swim with the current and bring their own products to market.

There are several benefits to having a behemoth like ICE getting involved in crypto by bringing something like Bakkt to the table:
1. Other large, institutional investors will look to ICE as a sort of stabilizing force for crypto. It will bring a certain level of respect to the crypto markets (in my opinion) and will cause a lot more “safe money” to be invested.
2. The SEC requires that investment advisors who manage more than $150M to have a qualified custodian to manage their asset classes. Bakkt can fill the role of such a custodian.
3. Regulators are also likely to be more “positive” towards the crypto space and they will likely create a better infrastructure under the impression that even the large institutions are getting involved. Besides, let’s not lie to ourselves. Wall Street and the government don’t just live in the same house, they share the same bedroom...

ICE’s news doesn’t come without significant potential downside though. I think (and there are many others who agree) that there is a serious risk of institutions creating products that are derivatives of Bitcoin and other cryptos.

That is, products that trade in and out based on the value of the underlying token, but without ever moving any actual Bitcoin.

Think of it like an options contract: institutions may create a product that allows investors to buy a contract that gives them the right to purchase 10 BTC for $10k, but no BTC is ever actually bought and no BTC is ever actually sold. 

One of the main reasons why BTC has value is because of scarcity. Scarcity is built into the Bitcoin blockchain for a reason and having these type of financial products can undermine that scarcity.

I’m not overly concerned about it, as I feel there are so many people who are willing to just HODL their BTC and it shouldn’t be too much of an issue for the long-term. It’s unlikely to have any long-term detrimental effects - in my opinion.

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Remember that none of this is financial advice, just my opinion about crypto news!!

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