USD 740m Valued Bakkt Will Need Huge Volume to Keep Investors Happy

Bakkt Exchange

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Linas Kmieliauskas

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Linas Kmieliauskas

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June 26, 2023

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After reportedly being valued at around USD 740 million, much-anticipated and oft-delayed crypto trading platform Bakkt will need a lot of trading volume to ensure satisfying returns to their investors, the Block reported, citing undisclosed sources.

The digital asset trading platform raised USD 182.5 million last year during their first round, putting its post-money valuation at around USD 740 million, the report said, adding that Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, may have sold up to 25% of shares in Bakkt to external investors.

According to the report, Bakkt’s proposed fee of USD 0.50 per contract is rather small, some equating it to less than 1 basis point, or 7 basis points lower than the next cheapest U.S. trading option.

As the platform will not be earning much based on their proposed contract fees, they’ll need not only a lot of volume, but “near flawless” execution, also, to cover its spending, the report said, citing one source.

Bakkt has long been regarded as a big step of traditional investors into crypto that could boost the adoption of Bitcoin and other digital assets.

“We are focused on opportunities to provide new infrastructure, including the industry’s first institutional grade regulated exchange, clearing and warehousing services for physical delivery and storage,” according to Kelly Loeffler, CEO of Bakkt. Their vision is “to bring digital assets into the mainstream by enabling efficient transactions between consumers and merchants.”

However, the launch of the platform was delayed twice due to regulatory issues.

“We are working through the regulatory review process and are looking forward to updating the market soon,” an ICE spokesman told the Wall Street Journal on Thursday.

Meanwhile, earlier this week, Dan Berkovitz, commissioner at the U.S. Commodity Futures Trading Commission, in an interview with BLOCKTV said that Bakkt approval is “a priority”.

The partners and investors in Bakkt include companies such as Boston Consulting Group, CMT Digital, Eagle Seven, Galaxy Digital, Starbucks, 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.