As you may have heard, earlier this week, CoinMarketCap held its first ever conference — The Capital — in Singapore. One of the event’s keynote speakers was Jennifer Ilkiw — vice president of Intercontinental Exchange (ICE), Asia Pacific. Watch the live speech on video, or read on for the exclusive backstage interview!
ICE — in addition to being the parent company of the New York Stock Exchange — created Bakkt, which became one of crypto’s most talked-about topics after it was first revealed in August 2018. The digital asset firm is best known for its first offering, physically delivered Bitcoin futures, which went live this fall.
The Capital: I want to ask about custody. Can you talk about what ICE went through getting that up and running and why that’s so important?
Jennifer Ilkiw: I can start with why the custody piece is so important. When we first talked to institutional investors about Bakkt, the message they gave us was clear: “we need to have it on a regulated exchange.”
From there, whether it was on ICE Futures U.S. or ICE Futures Singapore, the idea was to have an end-to-end regulated marketplace, which included custody, trading and clearing. So we wanted to marry a regulated custodian, Bakkt, with a regulated futures exchange, ICE Futures U.S., with a regulated clearing house, ICE Clear U.S.
From there, we went to the New York Department of Financial Services (NYDFS) and walked them through exactly how the custody piece would work and how it would interact with ICE’s trading infrastructure.
The Bakkt Warehouse was approved by NYDFS in September and we announced earlier this week that we received authorization to offer Bitcoin custody to all institutions, giving clients around the world the ability to safeguard their assets using Bakkt’s enterprise-grade offering.
The Capital: Why is it regulated specifically in New York?
Ilkiw: As I mentioned earlier, because Bitcoin is a newer asset, regulatory oversight was such an important part of our offering. And because New York is a recognized and trusted regulator in the U.S., it was a natural fit.
The Capital: OK, and we’re just talking about Bitcoin custody, right? And how does clients’ fiat play into all this. You’re a trust but do you hold fiat?
Ilkiw: So if you’re trading a futures contract, you pay margin in U.S. dollars. But you don’t pay it to the warehouse, you’re paying it to your clearing member. All cash sits with the clearing member. The clearing members will then collect all of the margins.
So, if they have 15 clients, they take all that margin and they pass it to the clearing house. And the clearing house, which is regulated, holds all of that cash.
The Capital: You mentioned during that talk about the cash-settled contract on ICE Futures Singapore. Is that new information?
Ilkiw: Yes that’s new. We’re just starting to talk about it now. It is slated to launch on the 9th of December as a cash-settled futures contract and it will be settled off of the physical settlement of the Bakkt Monthly Bitcoin Futures contract, which is listed on ICE Futures U.S.
As a cash-settled contract, at the end of the contract month, a market participant would get cash or pay it, as opposed to receiving or delivering Bitcoin.
For some clients this works very well because it allows them to experience Bitcoin without taking delivery of Bitcoins and needing to have a wallet to do that.
So anybody who just wants to experience the volatility of Bitcoin can now trade it, which could help bring it more mainstream.
The Capital: But that’s in Singapore only, the cash-settled option?
Ilkiw: No, the offering is global. Though we plan to list it on our Singapore exchange, it will be available to our customers globally in any regulated jurisdiction. ICE Futures Singapore is recognized as a Foreign Board of Trade (FBOT) in the U.S., which allows anybody from the States to trade it.
Anyone in Singapore, Hong Kong…anywhere where most people trade, they’ll be able to get access to this.
The Capital: You guys also announced that you’re going to launch options and that’s another first in the industry. What’s the significance of these derivatives for crypto?
Ilkiw: We are focused on building up a number of different things over time. We started with the physically delivered futures contract and plan to add the cash-settled futures, which we already discussed, and options, which are also planned to launch in December.
The Bakkt Bitcoin Options contract will be based on our benchmark monthly futures contract and represents another important step in developing this asset class for institutional investors and their customers.
The Capital: So at the end of your speech you were talking about women in finance. Can you expand on that topic?
Ilkiw: Working in the commodities and financial industry has changed a lot over the past 20 years, and for the better.
I am relatively new to the digital asset space — having been in this area for the last year or so — although I also know being in the space for 10 years can make you the dinosaur in the room.
Where I also see a hole in this market is a space for women in digital assets to develop and seek mentorship.
This, like many industries, is predominantly male. Many years of my career have also been in the oil space -— also very male dominated.
I have been thinking a lot about mentorship over the last few years and what that means. We need to think about mentors beyond the workplace.
I think we need to look to the women in the space today to help them to develop and unlock their potential.
The Capital: How did you get into finance?
Ilkiw: I got into finance because I wanted to make sure that I was independent. That was a big thing for me.
When I was in my late teens, my father, who was also in finance, introduced me to a number of women in the financial markets. He would have me meet them for lunch so they could tell me about their roles in risk, or bonds or derivatives.
I probably understood 10% of what their roles entailed, but what I took away was how far they had gotten in their careers. And how they spoke so passionately about what they did. It was a real influence for me.
This interview has been edited and condensed.