Bitcoin got the backing of a critical figurehead on Wall Street this week.
Jeff Sprecher, chairman of the New York Stock Exchange and CEO of its parent company, Intercontinental Exchange, said that despite headlines of cryptocurrencies flopping, digital assets have a future in regulated markets.
When asked about the dropping prices, Sprecher brought up a perennial question posed by critics: "Will digital assets survive?"
"The unequivocal answer is yes," he said on stage at the Consensus: Invest conference on Tuesday. "As an exchange operator it's not our objective to opine on prices."
Sprecher's Intercontinental Exchange, along with Starbucks, Microsoft and BCG, is backing a new company called Bakkt that will facilitate bitcoin futures trading by the first quarter of next year. The initial launch was set for November 2018, but the company announced last week it would push that debut back to January.
Kelly Loeffler, chief executive officer of Bakkt, gave some details on the decision. She explained that the original timeline was ambitious and the customer pipeline filled up quickly.
"To give it the best chance for success we pushed it back to the holidays to give people more time to get on board," Loeffler said. "It's a positive indication of the interest and it gives people time to learn. We have a responsibility to do that so we're taking that extra time."
Bakkt is starting with bitcoin, which is regulated by the Commody Futures Trading Commission. The company's role, as Loeffler explained it, is to provide custody and price discovery for bitcoin that's free from fraud and manipulation. Prices now tend to fluctuate depending on the exchange, which in many cases are unregulated.
"We're creating that infrastructure that doesn't exist today, which we think is a big opportunity for institutional investors to come in," Loeffler said.
Another key difference is how the futures contracts will settle.
Bakkt's bitcoin futures will settle in bitcoin. Existing bitcoin futures on the CME and CBOE, which began trading in December, settle in cash. Those futures contracts this week hit their lowest prices since they began trading last year. The Nasdaq and VanEck also plan to launch bitcoin futures in the first quarter of 2019.
Bitcoin prices jumped as much as 16 percent Wednesday after hitting a new 14-month low over the weekend. The world's largest cryptocurrency was trading around $4,300 as of 3:55 p.m. ET.
Bitcoin as a benchmark
While it might not have the best technology of all cryptocurrencies, bitcoin will still likely emerge as the yardstick by which all others are measured, Sprecher said.
"Somehow bitcoin has lived in a swamp and survived," Sprecher said."There are thousands of other tokens that you could argue are better but yet bitcoin continues to survive, thrive and attract attention."
Sprecher, who is married to Loeffler, likened it to the Dow Jones Industrial Average. The "Dow" as it's known, is an index of 30 stocks that is price-weighted, meaning it gives higher-priced stocks more influence but doesn't take into account the industry size or market cap.
"The Dow has been around for decades. It's a terrible index. We could come up with an index that's more representative of our economy but somehow that index will not go away," Sprecher said.
Dow critics say it's not an accurate representation of market performance. Yet, it's the most widely used barometer. Similarly bitcoin has flaws, but Sprecher said it's still likely to be the go-to cryptocurrency.
"Often times in finance, it's not about being the best — it turns out to be about being the broadest and the most commonly accepted and for whatever reason bitcoin has become that."
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