Starbucks to advise on development of bitcoin trading platform

Starbucks has announced it will be helping Intercontinental Exchange, an operator of global exchanges, clearing houses, data and listings services, develop a new company that will serve as a global ecosystem for trading digital assets.

The retailer is one of many firms, including BCG and Microsoft, that will help to develop the company, called Bakkt, by sharing experiences in regulated markets, risk management, technology and consumer experience.

The Bakkt ecosystem will eventually become an open and regulated integrated platform, through which consumers and firms will be able to buy, sell, store and spend digital assets. Its first use case will be trading and converting digital currency bitcoin to currencies deemed legal tender, such as the US dollar.

The ecosystem will use Microsoft’s cloud services to develop regulated markets, warehouses and applications for merchants and consumers.

As the flagship retailer in the project, Starbucks will play a “pivotal role” in helping to develop trusted and regulated applications that will make it easy for customers to convert digital assets such as bitcoin to US dollars, said the coffee company’s vice-president of partnerships and payments, Maria Smith.

“As a leader in mobile payments to our more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for our customers,” she said. 

Bakkt is preparing to launch in November 2018, subject to Commodity Futures Trading Commission review and approval.

One of its first services will be physical regulated warehouses in which a one-day physical bitcoin contract can be delivered. Where bitcoin futures are currently cash-settled, meaning the currency is not physically delivered but instead represented as a cash position in the selling firm’s books, a bitcoin traded through Bakkt will actually be delivered on a specified date, allowing the cryptocurrency to be exchanged for real-life products.

To allow this, Bakkt’s regulated warehouses will establish new protocols for the management of digital currencies, with the aim of developing a more open technology where existing markets and merchant infrastructure can successfully connect with and use blockchain.

The firm is being developed in answer to increasing market demand for digital currencies, with the digital asset marketplace now estimated to be worth $270bn.

“In bringing regulated, connected infrastructure together with institutional and consumer applications for digital assets, we aim to build confidence in the asset class on a global scale, consistent with our track record of bringing transparency and trust to previously unregulated markets,” said Jeffrey Sprecher, founder, chairman and CEO of Intercontinental Exchange.

Bitcoin and the blockchain have been catching people’s interest over the past few years, but can still seem a complex and illusive subject to the average consumer – something Bakkt may help to fix through its goal of making digital currencies and other assets more secure and accessible.