Bakkt

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Bakkt
Founded	2018
Headquarters	Atlanta, Georgia
Key People	Gavin Michael, CEO; Adam White, President; Nicholas Cabrera, Chief Product Officer; Matthew Johnson, CTO
Employees	350
Products	Digital asset trading, storage and purchases
Twitter	@Bakkt
LinkedIn	Profile
Facebook	Page
Website	Bakkt Home
Blog	Bakkt Blog

Bakkt is a digital assets custody service created by and majority-owned by Intercontinental Exchange (ICE). It pivoted from exclusively warehousing bitcoin to providing digital services for participants in online video gaming and commercial loyalty programs.

Bakkt's formation was announced by ICE on August 3, 2018. The company named Microsoft and Starbucks as partners.

Bakkt said at the time that ICE Futures US would launch unmargined deliverable futures trading in November 2018. The launch of futures trading was delayed until January 24, 2019, however, as Bakkt continued to work with the U.S. Commodity Futures Trading Commission to gain its approval. According to a Wall Street Journal article in March 2019, Bakkt, whose operations were held in abeyance at the time, lacked CFTC approval for its plans to handle customer funds, including those denominated in cryptocurrencies.

Bakkt announced that it had received investments of $182.5 million on December 31, 2018 to build out its bitcoin futures and options products. The twelve investors included ICE, Boston Consulting Group, Galaxy Digital, Goldfinch Partners, Alan Howard, Horizons Ventures, Microsoft's venture funding arm and Pantera Capital. Starbucks was not mentioned. The following February, an unidentified individual tried to scam people by sending emails attempting to attract potential investors for a second round of investments in Bakkt. The emails asked recipients to register names, email addresses and wallet addresses at bakktplatform.io., a fake web site.

Kelly Loeffler, the spouse of ICE CEO Jeffrey Sprecher, was the first CEO of Bakkt. The three pillars of Bakkt, according to Loeffler, were to be a consistent regulatory construct, transparent, efficient price discovery, and an institutional quality pre- and post-trade infrastructure.In October 2018, Bakkt announced that Adam White, who was the fifth employee hired by Coinbase and now the second hired by Bakkt, would join as COO. In April 2019, Bakkt announced that it had hired PayPal and Google veteran Mike Blandina as Chief Product Officer. In June 2019, Bakkt brought on Chris Petersen, a former payments product strategist from Google, to help the firm launch its mobile app-based wallet, dubbed Bakkt Pay.

In January 2019, Bakkt acquired the back office group of Rosenthal Collins Group, a subsidiary of Marex Spectron. Bakkt acquired the back office processing systems, treasury and compliance departments so it could handle payments between customers and merchants on Bakkt.

The firm moved toward adding custody services in April 2019, acquiring the Digital Asset Custody Company. It also announced its application for a so-called BitLicense in New York, which would allow the company to operate a cryptocurrency exchange in that state, and put up $35 million of its own money into the clearinghouse, which serves as a risk waterfall.

Bakkt announced the members of its five-person board of directors on March 29, 2019. The members were Akshay Naheta, managing partner at Softbank, Sean Collins, managing partner at Goldfinch Partners, Kelly Loeffler, Jeff Sprecher, and Tom Noonan, member of the ICE board of directors who will also serve as chairman of the Bakkt board.

In October 2019, Bakkt announced its plans to move into the consumer space with a cryptocurrency consumer app and merchant portal in the first half of 2020 aimed at enabling bitcoin and other cryptocurrency transactions. It said it planned to test the consumer app with its partner, Starbucks, which is an equity holder in the venture.

In December of 2019, Loeffler was appointed to the U.S. Senate to complete the remaining year of retiring Republican Georgia Senator Johnny Isakson's term.

On December 23, 2019, Bakkt announced that ICE had appointed Blandina as CEO and Adam White as president of the company. Nicholas Cabrera became the new chief product officer.

In April 2020, Bakkt announced that Blandina was leaving to work at JPMorgan. Bakkt appointed David Clifton, ICE’s vice president of M&A and integration, as interim chief executive officer. He would later be replaced by Gavin Michael.

Services

Custody

Bakkt established Bakkt Trust Company, which received a charter from the New York State Department of Financial Services (NYDFS) on August 16, 2019. The NYDFS "has authorized Bakkt to provide custody services for bitcoin in conjunction with the launch of physically delivered bitcoin futures contracts. Bakkt will serve institutional customers; its bitcoin futures contracts will be listed for trading on Intercontinental Exchange (ICE) Futures US and cleared through ICE Clear US." Bakkt refers to this service as Bakkt Warehouse.

According to a September 9, 2019 Tweet from Bakkt, "Bitcoin deposited at our Warehouse is protected by a $125 million insurance policy."

Bakkt's license from the New York Department of Financial Services was later expanded to allow it to provide services to "institutional" clients, according to a blog post by Bakkt COO Adam White on November 11, 2019. On November 19, Galaxy Digital announced that it would use Bakkt as a custodian for its two new bitcoin investment funds.

"Bakkt futures"

On August 16, 2019, Loeffler announced on Bakkt's blog that ICE Futures U.S.'s physically-delivered bitcoin futures, commonly referred to as "Bakkt futures," would launch trading on September 23, 2019. Contrary to previous statements from Loeffler and others, Bakkt's role was limited to its subsidiary Bakkt Warehouse's execution of final delivery instructions on ICE Futures U.S.'s daily and monthly bitcoin futures. Priced in U.S. dollars, each futures contract is for one bitcoin. After the end of trading in a futures contract, ICE Clear U.S., which clears the futures contracts, matches buyers and sellers with open positions and provides delivery instructions to Bakkt. Market participants who are the beneficial owners of those positions must have accounts at Bakkt in order to receive or pay bitcoin.

On September 23, 2019, ICE Futures U.S.'s bitcoin futures contract launched. Bakkt futures initially saw low daily trading volumes. In its first week of trading, only 623 bitcoin futures contracts - each of which represents a single bitcoin - were traded, amounting to just $5 million worth of the asset. Dave Weisberger, CEO of CoinRoutes, said that it was too early to write off Bakkt, because it takes time for traders to migrate between platforms, saying, "these things tend to develop slowly."In October, ICE filed three certifications with the CFTC for programs to enhance trading volumes: liquidity provider program, market maker program and delivery provider program. Neither the incentives provided by the exchange nor the requirements on traders to qualify for payments were made public. ICE's trading volume in its physically-settled monthly bitcoin futures contracts spiked, rising from the futures contract equivalent of $690,000 on October 22 to the futures contract equivalent of $4.81 million on October 23. The contract volume hit a record high to date of 1,756 contracts on November 8, 2019.

ICE Futures U.S. introduced options on its bitcoin futures on December 9, 2019. The European-style options expire two days prior to the last trading day of the futures contract. Bakkt announced that same day that ICE Futures Singapore, an electronic futures market based in Singapore which operates separately from ICE Futures US, had launched trading in cash settled bitcoin futures based on ICE Futures US settlement prices.

Bakkt app

Bakkt Chief Product Officer Mike Blandina wrote in a blog post on October 28, 2019 that the company would introduce a consumer app in 2020 that would allow customers to make easy payments from their mobile devices. The first retailer to allow its customers to use the app for purchases will be Starbucks.

Loyalty points platform

In February 2020, ICE announced the acquisition of Bridge2 Solutions, a company that manages loyalty and rewards points platforms for numerous companies. ICE said Bakkt would acquire Bridge2 Solutions from ICE after Bakkt had completed its Series B fundraising later in the first quarter of 2020.

Bridge2 plans to build an app that would take advantage of its existing network of merchants by allowing those merchants to opt into plugging their payment processes directly into the Bakkt app instead of going through financial institutions to process payments. Bakkt would charge a fee, Fortune reported, but it would be lower than the 2.5 percent interchange fee charged by most banks. The Bridge2-developed app would also allow users to convert their unused rewards and loyalty points from the platforms Bridge2 already manages into cash or bitcoin.

Blandina published a blog post on March 16, 2020 saying that Bakkt had completed its Series B fund raise of $300 million dollars. While the blog post provided little in detailed financial information, Blandina revealed that the investors were ICE, M12 (Microsoft Ventures), PayU, Boston Consulting Group, Goldfinch Partners, CMT Digital and Pantera Capital, all of which were among the original investors. Blandina implied that ICE had transferred Bridge2 solutions to Bakkt, as was originally planned. Bakkt has 350 employees according to the blog post. ICE did not reveal the price it paid for Bridge2 Solutions nor the value at which it transferred the asset to Bakkt. Crunchbase, an online service which tracks investment in technology-based startups, reports that Bridge2 Solutions had raised $77 million in three rounds prior to the sale of the company to ICE.

Bakkt president Adam White tweeted on March 16, 2020, that Bakkt payments had been integrated into the Starbucks app.

Bakkt partners with Mastercard

On October 25, 2021 Mastercard Inc. and Bakkt Holdings announced they formed a parnership to enable card users to pay their bills with bitcoin. As reported in the Wall Street Journal, the companies said banks and other financial institutions that issue cards through Mastercard would be able to issue cryptocurrency debit or credit cards that would not only allow payments in bitcoin, but also earn rewards in the cryptocurrency.

Spin-off from ICE

According to a January 7, 2021 report from online news service Bloomberg, Bakkt would imminently merge with special purpose acquisition company VPC Impact Acquisition Holdings which is listed for trading on Nasdaq.

In January 11, 2021, Bakkt Holdings, LLC and VPC Impact Acquisition Holdings, a special purpose acquisition company (SPAC) formally announced they entered into a definitive agreement for a business combination that would eventually result in Bakkt becoming a publicly traded company with a value of approximately $2.1 billion. Gavin Michael, who previously served as head of technology for Citi's Global Consumer Bank, was named CEO in conjunction with the announcment. The company said interim CEO David Clifton would join the combined company’s board of directors at the closing of the business combination.

Bakkt went public in October 2021 after completing the merger with VPC Impact Acquisition Holdings. The combined company’s Class A common stock and warrants began trading on the New York Stock Exchange (“NYSE”) under the ticker symbols “BKKT” and “BKKT WS”, respectively, on Monday, October 18, 2021.

Key people

• Gavin Michael, CEO
• Kelly Loeffler, founder, former CEO
• Adam White, President