Thanks US Shutdown: Why Bakkt and Others Will Likely be Delayed

| Updated
by Teuta Franjkovic · 4 min read
Thanks US Shutdown: Why Bakkt and Others Will Likely be Delayed
Photo: Thomas Hawk / Flickr

The ongoing government shutdown achieved a new milestone on Friday by hitting the record for the longest shutdown in US history. While all the spheres are negatively affected, this has laso put key developments in the crypto space on hold.

Today marks the 21st day of the partial shutdown that started days before Christmas over a standoff between President Donald Trump and congressional Democrats over funding for the President’s long-promised border wall.

That’s the same length of time as the 21-day shutdown that stretched from December 1995 to January 1996 as a result of a clash between President Bill Clinton and the GOP Congress. That shutdown currently holds the record as the longest in US history.

However, it seems that the shutdown is hurting the crypto industry too.

The closure of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) has put key developments – namely, the approval and launch of products and services involving cryptocurrencies – on hold.

First, the launch of Bakkt’s Bitcoin Futures market was delayed in part by the company’s inability to secure approvals before Dec. 22, 2018, when the shutdown began. The platform, created by Intercontinental Exchange, is in a holding pattern until regulators can open a 30-day public comment period. A new launch date for the platform, which most recently was set for Jan. 24, has yet to be announced.

On the other hand, ErisX, a trading platform that recently raised $27.5 million from prominent investors, is also waiting for furloughed federal employees to return to work. The platform aims to be a regulated futures market and clearinghouse, which requires approval from the CFTC.

ErisX’s CEO Thomas Chippas said:

“ErisX’s interaction with the CFTC has been both positive and productive. During this government shutdown we have continued our platform development efforts. We look forward to this current impasse being resolved and re-engaging with [CFTC] staff on our DCO [derivatives clearing organization] application.”

According to the company’s statement, ErisX will leverage their investors’ strengths, experiences, and knowledge in pioneering a single platform for digital asset spot and regulated futures contracts. ErisX promises to enable investors to trade such digital currencies as Bitcoin, Litecoin, Bitcoin Cash, and Ethereum on spot and futures markets starting from next year, subject to regulatory approval.

ErisX will also launch its trading platform and clearing service next year. In 2017, ErisX filed documents for derivatives clearing organization (DCO) with US Commodity Futures Trading Commission (CFTC). The approval is expected to be given in the first quarter of 2019. ErisX will get clearing services by its clearinghouse, which needs a separate CFTC permit. In the second half of 2019, ErisX is planning to start its futures offering.

The truth is, that currently, the markets are unsettled and it seems like it will remain that way if the government continues in the current shutdown state. Furthermore, the futures trading weekly reports of CBOE and CME were suspended since December 18, 2018.

Another reason that may delay the launch of Bakkt is the recent loss of liquidity that will play a major role in further elongating CFTC’s timeline.

Specifically, the CFTC must grant an exemption for Bakkt’s plan to custody Bitcoin on behalf of its clients in its own “warehouse,” according to sources familiar with regulatory discussions of the plan. CFTC regulations normally require that customer funds be held by a bank, trust company or futures commission merchant (FCM).

SEC also recently delayed its decision on the rule change for a VanEck’s Bitcoin exchange-traded fund. The new deadline is February 27, 2019.

Meanwhile, when contacted, SEC gave an automatic answer:

“Due to a lapse in appropriations for the federal government, the U.S. Securities and Exchange Commission is currently closed. I am currently out of the office, and will return to the office once an appropriation has been enacted. During the closure, I will not be monitoring or responding to my emails. Thank you.”

Altcoin News, Bitcoin News, Cryptocurrency news, News
Teuta Franjkovic

Experienced creative professional focusing on financial and political analysis, editing daily newspapers and news sites, economical and political journalism, consulting, PR and Marketing. Teuta’s passion is to create new opportunities and bring people together.

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