Bakkt is born. Kik is dead. Kin is a zombie?
Plus a look at the latest nothinburger of a Congressional hearing on crypto
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The Lede: As crypto winter was settling in last year, one of the few shining announcements was that the Intercontinental Exchange (ICE), owner of the New York Stock Exchange, would be building Bakkt, an institutional-grade custody platform and launching physically-settled bitcoin futures.
The excitement the announcement inspired was based on numerous factors. First of all, physical settlement means that bitcoin itself (rather than simply the cash value equivalent) exchanges hands, creating (theoretically) more demand for the underlying asset. Second, the pedigree of the company involved in the offering created optimism that a new set of institutional buyers would feel comfortable entering the market. Third, with those first and second factors combined, more accurate price discovery would be enabled.
On Monday, Bakkt actually launched, but it did so as more of a gentile breeze than a thunderous roar. Coindesk pointed out how long it took to get any volume moving at all. Alex Kruger put plainly the contrast between CME cash-settled futures launch a year earlier with the current Bakkt launch, which represented just a fraction of the volume. Memes of Vincent Vega confused in empty warehouses abounded.
At the same time, there were many who anticipated not only the slow out-of-the-gate volume, but the likely crypto Twitter reaction to it as well. Luke Martin said “Bakkt =/= a Binance IEO.” BitcoinTINA argued that physically settled futures for a fundamentally new asset are way out of the wheelhouse of Wall St. traders and likely to take some time. Su Zhu put it maybe best of all:
For my part, I agree that Bakkt is fundamentally long term infrastructure. Its value lies in the optionality it creates for a new set of actors to get involved. We sometimes still operate as though it is 2017 and an announcement of an announcement of a partnership can send prices soaring. The point is: the point was never about day 1 with Bakkt. Let’s talk in a few months.
And also: The strange saga of Kik and Kin continues. From the get-go, their participation in the crypto markets has felt somehow off. Most recently, it has been their at once antagonistic and defensive “Defend Crypto” campaign, effectively trying to paint the SEC as the big baddie of the industry. Over the last couple days, the story just got weirder, with Coindesk publishing a story (which was nearly immediately revealed to be a hoax and retracted) that CEO Ted Livingston had drunk texted a reporter of theirs that he was quitting because he was unwilling to go to jail over the company. The weird hoax somehow overshadowed the point that the company would be shutting down their messenger app and slashing 80%+ of their staff to just focus on Kin.
To some, the story was an ICO that killed a successful app. I think it’s the opposite. While Kik had gotten itself to 9 figure users, it was ultimately an also ran in the messenger wars. By the time it chose to do an ICO, it was a Hail Mary to get more money on favorable terms and innovate their way into something valuable enough to compete. So far, it hasn’t worked. The question is how getting rid of the central asset of Kin - the large install base of Kik - is going to actually help.
Finally: All 5 SEC commissioners testified before Congress yesterday. It wasn’t solely focused on crypto, but there was still some meaningful amount of discussion on the topic. The TL;DR is that nothing new in particular happened here. Clayton still focused on people complying with existing laws; Hester Peirce still wants safe harbors; Congressman Warren still wants the Token Taxonomy Act; Brad Sherman still wants us infidels dead. Oh, and Libra is still the crypto causing the most concern.
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