New York Stock Exchange Owner Is Building a Cryptocurrency Exchange

Can Bitcoin go mainstream? Intercontinental Exchange (ICE) is reportedly developing its own cryptocurrency exchange and may have a custody solution.

David Nurieli
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The parent company of New York Stock Exchange, the "Intercontinental Exchange (ICE)", has been developing its own online platform for cryptocurrency exchanges and could become the latest Wall Street company to offer Bitcoin services. In March, the Georgia-based ICE, first entered the market via a cryptocurrency data feed.

According to The New York Times, they have cited numerous "emails and documents", as well as, four anonymous sources that the firm is planning to offer traders contracts. This will eventually result in customers owning cryptocurrency. According to reports, “[ICE] has had conversations with other financial institutions about setting up a new operation through which banks can buy a contract, known as a swap, that will end with the customer owning Bitcoin the next day - with backing and security of the exchange.”

The interest from Wall Street is growing. Goldman Sachs has recently announced their intention to participate in the cryptocurrency world, while other notable trading firms have been trading crypto, such as Chicago-based HFTs DRW and Jump Trading. Nasdaq has indicated that it is open to becoming an exchange and it has collaborated with Gemini Trust Co. to provide market surveillance for Bitcoin and Ethereum trading. In addition, they will launch an auction that helps price CBOE Global Markets.

Some large financial exchanges, including the Chicago Mercantile Exchange and Cboe Global Markets, have already created financial products linked to the price of Bitcoin. ICE will be focused on the data and adding transparency to the marketplace known for its wild price swings and fraud through its data-feed product. “The swap contract is more complicated than an immediate trade of dollars for Bitcoin, even if the end result is still ownership of a certain amount of Bitcoin,” the report said. “But a swap contract allows the trading to come under the regulation of the Commodity Futures Trading Commission and to operate clearly under existing laws — something today’s Bitcoin exchanges have struggled to do.”

How do you hold on to these assets that are generally bearer instruments? You need to have a third-party custody person. And if the reports are accurate, if ICE has a custody solution that is SEC compliant, then crypto could become an emerging asset class. Final details of the exchange platform have not completed, as Wall Street investors are highly resistant to virtual currencies. For the first time, the industry is seeing unprecedented institutional interest in Bitcoin and the main stream is shifting to include cryptocurrencies.

Image (c) joergengeerds