Understanding Bakkt and Its Many Transformations

Bakkt was founded in 2018 by a team led by Kelly Loeffler, who is now a US Senator.

In its early days, Bakkt was a cryptocurrency futures exchange that aimed to provide a regulated and secure platform for institutional investors to trade Bitcoin futures.

Bakkt's first product, the Bakkt Bitcoin Daily Futures Contract, launched in September 2019, allowing investors to buy and sell Bitcoin futures contracts that settled daily.

The platform's focus on institutional investors and its commitment to regulatory compliance set it apart from other cryptocurrency exchanges at the time.

Bakkt completed a merger with VPC Impact Acquisition Holdings in October 2021, resulting in the company being listed on the New York Stock Exchange.

This significant milestone marked a new chapter in Bakkt's history as a publicly traded company.

In April 2023, Bakkt acquired Apex Crypto, a Chicago-based integrated crypto trading platform.

This strategic move further solidified Bakkt's position in the crypto industry.

Bakkt has been making waves in the cryptocurrency space with its innovative approach to institutional investment. It launched its physical Bitcoin futures contract on September 23, 2019, in partnership with the Intercontinental Exchange (ICE).

The contract was designed to provide a more traditional and regulated way for institutions to invest in Bitcoin, with a daily settlement and a fixed price. This move marked a significant step towards mainstream adoption of cryptocurrency.

Bakkt's parent company, ICE, has a long history of facilitating financial transactions, and its involvement brought a level of credibility to the Bakkt platform.

Bakkt completed a merger with VPC Impact Acquisition Holdings in October 2021, listing itself on the New York Stock Exchange.

This move marked a significant milestone for the company, solidifying its position in the market.

In April 2023, Bakkt acquired Apex Crypto, a Chicago-based integrated crypto trading platform.

This acquisition is expected to enhance Bakkt's offerings and expand its reach in the crypto space.

Bakkt's many pivots are a notable aspect of its business strategy.

Bakkt has had a few more pivots than most startups, with its latest announced in June.

In Q4, it plans to launch an institutional trading venue, BakktX, an Electronic Communication Network (ECN) for cryptocurrencies.

Its first product was Bitcoin futures launched in 2019.

Bakkt spent almost $300 million acquiring rewards service provider, Bridge2 Solutions, in early 2020.

It used the acquisition to launch a consumer-facing digital wallet app in 2021, which supported loyalty and rewards accounts alongside crypto.

Given its ICE heritage, a direct-to-consumer app wasn't its sweet spot.

Two years later, Bakkt dropped the consumer app with a B2B2C pivot, acquiring Apex Crypto for around $200 million in late 2022.

Apex provided crypto trading services to 30 fintechs and corporates, who in turn offered services to consumers.

Bakkt was keen to avoid falling foul of the SEC, so it reduced the range of coins on offer, although it has subsequently expanded them.

Its latest pivot towards an institutional trading venue seems the best fit for its ICE heritage.

However, Bakkt will face competition, as in the U.S., Schwab, Citadel Securities, and Fidelity Digital Assets are amongst the backers of institutional venue EDX Markets.

If this caught your attention, see: Currency Trading Hedge Funds