Futures

Here’s how Bakkt and ErisX are different, according to their executives

Quick Take

  • ErisX and Bakkt both want to launch bitcoin futures
  • But the two firms are taking different approaches to the market, according to their executives
  • The firms are both waiting for the regulatory green light

Bakkt and ErisX are often mentioned in the same breath when folks opine on the institutionalization of crypto. 

The two firms are both looking to break into the bitcoin derivatives market with their own physically delivered bitcoin futures product, but there are some key differences between them. 

Those differences were on full display last week during an industry conference at which ErisX CEO Thomas Chippas and Bakkt COO Adam White shared the stage for a panel about the maturation of the digital asset market.

Bakkt, according to White, is not just building a business that will provide key institutional infrastructure, similarly to players such as ErisX, CME, and Seed CX, but it is also looking to support initiatives that could drive crypto adoption.

“To me, it is not enough just to say we are going to invest a ton of money into market infrastructure and hope someone else figures out why we’re going to use [crypto],” White said. 

“I think we are going to see volumes continue to flatten, price probably to trend to zero, because everyone is baking in that the future public blockchains are going to be more efficient, they are going to be cheaper, they are going to be faster … but it requires companies building actual use cases and applications on top of that.”

“I think Bakkt wants to do a little bit more of that as well so hopefully all of our companies see a little bit more flow,” he concluded. 

Bakkt, notably, has partnered with firms such as Microsoft and Starbucks to spur merchant adoption of digital assets. 

Chippas in an interview with The Block noted ErisX is a pure market infrastructure play. 

“Bakkt believes that being both a clearing house as well as a payment processor in competition with Visa and MasterCard is the way to go because they think they need to push the development,” Chippas said. “Our view more is we want to provide a marketplace where these commodities can be traded, futures can be provided so that others can actually go develop.”

When launch?

As for when ErisX and Bakkt will launch, the exact date remains uncertain for their respective bitcoin futures contracts. 

“I have no evidence based upon our experience that the regulator is going slow or dragging their feet,” Chippas said. 

ErisX, a successor of swaps marketplace Eris Exchange, is waiting on the CFTC to approve its DCO license before it opens for business. That approval was expected in Q1. 

“So what I would say is if the delay is going to be measured in years, then that could be a problem. Months? Probably not a problem,” he said.

“The right answer is going to be when the regulators are ready and they feel that the requirements have been met,” Chippas added. 

White is also not too antsy, noting that working with regulators is a process. 

“It’s partnering and working with the regulators to help them understand what is hard fork, what a deep chain reorg is, why one blockchain or public blockchain may be sufficient and capable while another one isn’t,” he said.