|Key People||Kelly Loeffler, CEO|
|Products||Digital asset trading, storage and purchases|
Bakkt is a subsidiary of the Intercontinental Exchange designed to create an open ecosystem that allows for the buying and selling of Bitcoin, as well as custody and consumer purchases using digital assets. It launched one-day and 30-day bitcoin futures contracts on September 22, 2019, with physical delivery of the digital asset and its custody services in November 2019.
Bakkt futures contracts are traded on ICE Futures US and cleared on ICE Clear US, which provides a guarantee fund plus an additional $35 million by Bakkt. Bakkt Warehouse, which provides custody services for bitcoin through its chartered bank called Bakkt Trust Co., has a $125 million insurance protection fund. The warehouse moves the Bitcoins at expiration, which is the physical delivery of the asset.
Bakkt, which is partnered with Boston Consulting Group, Susquehanna International Group, Fortress Investment Group, Eagle Seven, Microsoft and Starbucks, among others, will also include merchant and consumer applications.
Bakkt was started by ICE CEO Jeff Sprecher and Bakkt founding CEO Kelly Loeffler, who developed the concept over five years before announcing the venture. ICE invested in Coinbase, a cryptocurrency spot market, with a minority stake in 2015 to learn how the cryptomarkets work. Bakkt aims to address several parts of the cryptocurrency space with "safe storage for digital currencies and on an institutional scale."
The three pillars of Bakkt, according to Loeffler, are: a consistent regulatory construct, transparent, efficient price discovery, and an institutional quality pre- and post-trade infrastructure.
In December 2018, Bakkt announced it had completed its first round of funding totaling $182.5 million from 12 partner firms including: Boston Consulting Group, CMT Digital, Eagle Seven, Galaxy Digital, Goldfinch Partners, Alan Howard, Horizons Ventures, Intercontinental Exchange, Microsoft’s venture capital arm, M12, Pantera Capital, PayU, the fintech arm of Naspers, and Protocol Ventures.
In January 2019, the firm announced the acquisition of the back office group of Rosenthal Collins Group, a subsidiary of Marex Spectron. Bakkt acquired the back office processing systems, treasury and compliance departments, which will be used to handle payments between customers and merchants on Bakkt.
The firm moved toward adding custody services in April 2019, announcing the acquisition of Digital Asset Custody Company (DACC). 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 it applied for a trust charter with the New York Department of Financial Services, which is also connected in the safekeeping and delivery of cryptocurrencies. That was approved by the New York State Department of Financial Services in August 2019, providing a charter to operate as a limited liability trust company, enabling the company to offer custody services with its Bakkt Warehouse. On November 8, 2019, Bakkt launched its custody service.
The company also put up $35 million of its own money into the clearinghouse, which serves as a risk waterfall.
The company began "user acceptance testing" for futures and its custody services in July 2019, allowing users to try out the trading system and custody services. Contracts will be cleared by ICE Clear US. It officially launched on September 22, 2019 at 8 pm EST.
Bakkt announced in October 2019 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 transactions. It will test the consumer app with its partner, Starbucks, which is an equity holder in the venture.
Products and Services
The Bakkt system is expected to include federally regulated markets and institutional-grade warehousing along with merchant and consumer applications.
Its first use cases will be for trading and conversion of Bitcoin versus fiat currencies, including a one-day physically delivered bitcoin futures contract. Bitcoin is today the most liquid digital currency.
- Launch Timeline for Bakkt’s Bitcoin Futures to Be Clarified Early 2019: ICE. Cointelegraph.
- Bakkt Sets July Test Date for Bitcoin Futures. Coindesk.
- Bitcoin Futures & Custody: Bakkt’s differentiated approach. Coindesk.
- Cleared to Launch. Bakkt.
- NYSE Owner Launches Long-Awaited Bitcoin Futures. Bakkt.
- Intercontinental Exchange Announces Bakkt, a Global Platform and Ecosystem for Digital Assets. ICE.
- The NYSE's Owner Wants to Bring Bitcoin to Your 401(k). Are Crypto Credit Cards Next?. Forbes.
- Buying Your Starbucks Fix With Bitcoin Is Now Closer to Reality. Bloomberg.
- The NYSE's Owner Wants to Bring Bitcoin to Your 401(k). Are Crypto Credit Cards Next?. Fortune.
- Custody Battle Brewing Over Crypto Assets, and That’s a Good Thing. John Lothian News.
- An evolving market. Kelly Loeffler - Medium.
- First capital raise: complete. Kelly Loeffler - Medium.
- Bakkt Acquisition Accelerates Plan to Streamline Consumer Payments. Fortune.
- NYSE-Linked Bitcoin Exchange Bakkt Just Unveiled a Major Acquisition. CCN.
- NYSE Owner Buys Crypto Custodian in Latest Push to Offer Bitcoin. Fortune.
- FINANCIAL SERVICES SUPERINTENDENT LINDA A. LACEWELL ANNOUNCES DFS GRANTS CHARTER TO BAKKT. New York State.
- Bakkt officially dives into crowded crypto custody market after NYDFS blessing. The Block.
- Bakkt to launch consumer app in first half of 2020; will test product with Starbucks. TheBlockCrypto.