Difference between revisions of "Bakkt"

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Bakkt is a custody service for digital assets created by and affilated with [[Intercontinental Exchange]] (ICE).<ref>{{cite web|url=https://medium.com/bakkt-blog/about|name=Blog|org=Bakkt|date=September 10, 2019}}</ref> Its formation was announced by ICE on August 3, 2018.<ref>{{cite web|url=https://www.businesswire.com/news/home/20180803005236/en/Intercontinental-Exchange-Announces-Bakkt-Global-Platform-Ecosystem|name=Intercontinental Exchange Announces Bakkt, a Global Platform and Ecosystem for Digital Assets|org=Business Wire|date=August 6, 2018}}</ref>
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Bakkt is a [[digital assets]] custody service created by and affilated with [[Intercontinental Exchange]] (ICE).<ref>{{cite web|url=https://medium.com/bakkt-blog/about|name=Blog|org=Bakkt|date=September 10, 2019}}</ref>  
  
With a planned focus on facilitating retail and business cryptocurrency transactions, Bakkt originally announced that it would launch deliverable futures trading in November 2018.<ref>{{cite web|url=https://www.cnbc.com/2018/08/03/starbucks-partners-with-microsoft-ice-on-new-cryptocurrency.html|name=New Starbucks partnership with Microsoft allows customers to pay for Frappuccinos with bitcoin|org=CNBC|date=August 3, 2018}}</ref> In a company blog post dated November 20, 2018, however, the company said that the launch of futures trading was delayed until January 24, 2019, as Bakkt continued to work with the U.S. [[Commodity Futures Trading Commission]] to gain its approval.<ref>{{cite web|url=https://medium.com/bakkt-blog/launch-and-faqs-e1a3f7691d7b|name=Launch update + reader FAQs|org=Bakkt|date=July 25, 2019}}</ref> 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.<ref>{{cite web|url=https://www.wsj.com/articles/bitcoin-futures-launch-hits-regulatory-snag-11553204037?mod=e2tw|name=Bitcoin Futures Launch Hits Regulatory Snag|org=The Wall Street Journal|date=March 22, 2019}}</ref>
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== Overview ==
  
Bakkt announced its five-member board of directors on March 29, 2019. The members include Akshay Naheta, managing partner at Softbank, Sean Collins, managing partner at Goldfinch Partners, Kelly Loeffler, Bakkt's CEO, Jeff Sprecher, ICE CEO and chairman, and Tom Noonan, member of the ICE board of Directors who will also serve as chairman of the Bakkt board.<ref>{{cite web|url=https://www.coindesk.com/bakkt-taps-former-ibm-and-cisco-exec-tom-noonan-to-chair-its-board|name=Bakkt Taps Former IBM and Cisco Exec Tom Noonan to Chair Its Board|org=CoinDesk|date=March 29, 2019}}</ref>
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Bakkt's formation was announced by ICE on August 3, 2018. The company named Microsoft and Starbucks as partners.<ref>{{cite web|url=https://www.businesswire.com/news/home/20180803005236/en/Intercontinental-Exchange-Announces-Bakkt-Global-Platform-Ecosystem|name=Intercontinental Exchange Announces Bakkt, a Global Platform and Ecosystem for Digital Assets|org=Business Wire|date=August 6, 2018}}</ref>  
  
== Background ==
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Bakkt said at the time that it would launch unmargined deliverable futures trading in November 2018.<ref>{{cite web|url=https://www.cnbc.com/2018/08/03/starbucks-partners-with-microsoft-ice-on-new-cryptocurrency.html|name=New Starbucks partnership with Microsoft allows customers to pay for Frappuccinos with bitcoin|org=CNBC|date=August 3, 2018}}</ref> In a company blog post dated November 20, 2018, however, the company said that the launch of futures trading was delayed until January 24, 2019, as Bakkt continued to work with the U.S. [[Commodity Futures Trading Commission]] to gain its approval.<ref>{{cite web|url=https://medium.com/bakkt-blog/launch-and-faqs-e1a3f7691d7b|name=Launch update + reader FAQs|org=Bakkt|date=July 25, 2019}}</ref> 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.<ref>{{cite web|url=https://www.wsj.com/articles/bitcoin-futures-launch-hits-regulatory-snag-11553204037?mod=e2tw|name=Bitcoin Futures Launch Hits Regulatory Snag|org=The Wall Street Journal|date=March 22, 2019}}</ref>
  
Bakkt is a [[bitcoin]]-based cryptocurrency retail payment platform developed by ICE. Bakkt initially planned on launching in November 2018. Pending approval from the [[Commodity Futures Trading Commission]] (CFTC), the company also planned on offering physical bitcoin [http://www.marketswiki.com/wiki/Futures_contract futures contracts] on release.<ref>{{cite web|url=https://www.businesswire.com/news/home/20180803005236/en/Intercontinental-Exchange-Announces-Bakkt-Global-Platform-Ecosystem|name=Intercontinental Exchange Announces Bakkt, a Global Platform and Ecosystem for Digital Assets|org=Business Wire|date=August 6, 2018}}</ref> Bakkt will also offer "warm" [[wallet]] insurance for its customers, as well as, potentially, services for 401(k) accounts and IRAs based on bitcoin.<ref>{{cite web|url=https://www.forbes.com/sites/rebeccacampbell1/2018/11/21/ice-postpones-bakkts-bitcoin-futures-launch-to-january-2019/#150ed8ec2e27|name=ICE Postpones Bakkt's Bitcoin Futures Launch To January 2019|org=Forbes|date=November 21, 2018}}</ref><ref>{{cite web|url=http://fortune.com/longform/nyse-owner-bitcoin-exchange-startup/|name=The NYSE's Owner Wants to Bring Bitcoin to Your 401(k). Are Crypto Credit Cards Next?|org=Fortune|date=August 3, 2018}}</ref>  
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Bakkt announced that it had received investments of $182.5 million on December 31, 2018. 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.<ref>{{cite web|url=https://cointelegraph.com/news/nyse-operators-crypto-platform-bakkt-completes-1825-million-funding-round|name=NYSE Operator’s Crypto Platform Bakkt Completes $182.5 Million Funding Round|org=Cointelegraph|date=March 22, 2019}}</ref> In the following February, leveraging Bakkt's fame an unidentified individual sent emails trying to attract potential investors for a second round of investments in Bakkt in a blatant scam. The emails asked recipients to register names, email addresses and wallet addresses at bakktplatform.io.<ref>{{cite web|url=https://www.financemagnates.com/cryptocurrency/news/fraud-alert-fake-bakkt-website-is-seeking-funds/|name=Fraud Alert: Fake Bakkt Website is Seeking Funds|org=Fortune|date=February 25, 2019}}</ref>
  
Additionally, representatives of Bakkt said it will provide users with the ability to use bitcoin to pay for retail goods and services, such as Starbucks coffee and Microsoft products. The infrastructure of Bakkt was developed based on Microsoft's cloud technology.<ref>{{cite web|url=https://www.bloomberg.com/news/articles/2018-08-03/nyse-owner-announces-bitcoin-venture-with-starbucks-microsoft|name=Buying Your Starbucks Fix With Bitcoin Is Now Closer to Reality|org=Bloomberg|date=August 6, 2018}}</ref><ref>{{cite web|url=https://www.cnbc.com/2018/08/04/brian-kelly-bitcoin-could-come-to-your-401k-with-starbucks-bakkt.html|name=Bitcoin could come to your retirement account, thanks to Starbucks' crypto venture: Investor Brian Kelly|org=CNBC|date=August 6, 2018}}</ref>
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Kelly Loeffler, spouse of ICE CEO Jeffrey Sprecher, is the CEO of Bakkt. In October 2018, Bakkt announced that Adam White, was the fifth employee hired by [[Coinbase]], would join as COO.<ref>{{cite web|url=https://www.theblockcrypto.com/2018/10/11/coinbases-adam-white-is-joining-bakkt-as-its-coo/|name=Coinbase’s Adam White is joining Bakkt as its COO|org=The Block|date=October 12, 2018}}</ref> In April 2019, Bakkt announced that it had hired PayPal and Google veteran Mike Blandina as Chief Product Officer.<ref>{{cite web|url=https://blocktribune.com/bitcoin-futures-exchange-bakkt-hires-mike-blandina-as-chief-product-officer/|name=Bitcoin Futures Exchange Bakkt Hires Mike Blandina As Chief Product Officer|org=BlockTribune|date=September 13, 2019, 2019}}</ref> 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.<ref>{{cite web|url=https://www.theblockcrypto.com/2019/06/20/bakkt-brings-on-google-ux-expert-as-it-builds-its-consumer-app-for-spending-cryptocurrency/|name=Bakkt brings on Google payments expert as it builds its consumer app for spending cryptocurrency|org=Bakkt|date=June 27, 2019}}</ref>  
  
Kelly Loeffler, spouse of ICE CEO Jeffrey Sprecher, is the CEO of Bakkt. In October 2018, Bakkt announced that Adam White, the "fifth employee" of [[Coinbase]], would join as COO..<ref>{{cite web|url=https://www.theblockcrypto.com/2018/10/11/coinbases-adam-white-is-joining-bakkt-as-its-coo/|name=Coinbase’s Adam White is joining Bakkt as its COO|org=The Block|date=October 12, 2018}}</ref>  In April 2019, Bakkt announced that it had hired former PayPal and Google executive Mike Blandina as Chief Product Officer.<ref>{{cite web|url=https://www.theblockcrypto.com/tiny/bakkt-hires-former-paypal-and-google-exec-as-chief-product-officer/|name=Fraud Alert: Fake Bakkt Website is Seeking Funds|org=The Block|date=April 12, 2019}}</ref>  
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Bakkt announced its five-member board of directors on March 29, 2019. The members include 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.<ref>{{cite web|url=https://www.coindesk.com/bakkt-taps-former-ibm-and-cisco-exec-tom-noonan-to-chair-its-board|name=Bakkt Taps Former IBM and Cisco Exec Tom Noonan to Chair Its Board|org=CoinDesk|date=March 29, 2019}}</ref>
  
In June 2019, Bakkt announced that it had brought on Chris Petersen, a former payments product strategist from Google, to help the firm launch its mobile app-based wallet, dubbed Bakkt Pay.<ref>{{cite web|url=https://www.theblockcrypto.com/2019/06/20/bakkt-brings-on-google-ux-expert-as-it-builds-its-consumer-app-for-spending-cryptocurrency/|name=Bakkt brings on Google payments expert as it builds its consumer app for spending cryptocurrency|org=Bakkt|date=June 27, 2019}}</ref>
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On September 23, 2019, Bakkt finally launched.<ref>{{cite web|url=https://www.coindesk.com/bakkt-is-finally-launching-its-bitcoin-futures-today-heres-what-to-expect|name=Bakkt Is Finally Launching Its Bitcoin Futures Today. Here’s What to Expect|org=CoinDesk|date=September 19, 2019}}</ref><ref>{{cite web|url=https://www.wsj.com/articles/nyse-owner-to-launch-long-awaited-bitcoin-futures-11569153649|name=NYSE Owner Launches Long-Awaited Bitcoin Futures|org=The Wall Street Journal|date=September 23, 2019}}</ref> As of 11 AM EST, Bakkt had sold 38 bitcoin futures contracts. By this time, the price of bitcoin had fallen 2.4 percent since the beginning of the day.<ref>{{cite web|url=https://www.bloomberg.com/news/articles/2019-09-22/bitcoin-is-growing-up-as-deliverable-futures-start-trading|name=Bitcoin Falls as Futures Exchange Makes Its Trading Debut|org=Bloomberg|date=September 23, 2019}}</ref>
  
In January 2019, Bakkt announced that the company had acquired the assets of [http://www.marketswiki.com/wiki/Rosenthal_Collins_Group_LLC Rosenthal Collins Group LLC], a [http://www.marketswiki.com/wiki/Futures_contract futures] commissions merchant that had been in business for over a century. Bakkt CEO Kelly Loeffler said that the acquisition was seen by members of the Bakkt project as an "opportunity." Bakkt acquired many of Rosenthal Collins' back office staff, including compliance, treasury, and risk management specialists.<ref>{{cite web|url=http://fortune.com/2019/01/14/bakkt-acquisition-consumer-payments/|name=Bakkt's New Acquisition Will Speed Its Plan to Streamline Consumer Payments|org=Fortune|date=January 14, 2019}}</ref>
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== Services ==
 
 
=== Fake Bakkt Investment Scam ===
 
 
 
In February 2019, an unidentified individual began sending emails in broken English, trying to attract potential investors for a second round of investments. The emails instructed their recipients to register their names and email addresses at bakktplatform.io, then provide a wallet address and send funds to a bitcoin address provided in a separate email. Representatives from ICE confirmed to Coindesk that this website is fake, and the person sending the emails is not affiliated with ICE or Bakkt.<ref>{{cite web|url=https://www.financemagnates.com/cryptocurrency/news/fraud-alert-fake-bakkt-website-is-seeking-funds/|name=Fraud Alert: Fake Bakkt Website is Seeking Funds|org=Fortune|date=February 25, 2019}}</ref>
 
 
 
== Products and Services ==
 
 
 
=== Bitcoin retail payments ===
 
 
 
In its initial statements Bakkt said that it will primarily function as a payment platform. The company said that it had has been working with retailers such as Starbucks to enable customers to make low-volume transactions using bitcoin.
 
 
 
=== Bitcoin futures ===
 
 
 
Bakkt will allow users to engage in cryptocurrency trading through bitcoin futures contracts. On June 13, 2019, chief operating officer Adam White announced in a blog post that Bakkt would initiate user acceptance testing on July 22 for its upcoming monthly and one-day futures contracts. The deliverable contracts will be for one bitcoin. A launch date for trading futures was not disclosed.<ref>{{cite web|url=https://www.coindesk.com/bakkt-reveals-bitcoin-futures-contract-details-ahead-of-july-test-date?utm_source=BlockchainBites&utm_medium=Email&utm_campaign=2019-06-13|name=Bakkt Reveals Bitcoin Futures Contract Details Ahead of July Test Date|org=CoinDesk|date=June 13, 2019}}</ref>
 
 
 
=== Bitcoin 401(k) and IRAs ===
 
 
 
The company plans on offering customers the ability to open 401(k) and IRAs using bitcoin.<ref>{{cite web|url=http://fortune.com/longform/nyse-owner-bitcoin-exchange-startup/|name=The NYSE's Owner Wants to Bring Bitcoin to Your 401(k). Are Crypto Credit Cards Next?|org=Fortune|date=August 3, 2018}}</ref>
 
 
 
=== Warm wallet insurance ===
 
 
 
In addition to offering warm wallets for users to store their bitcoins, the company plans to offer insurance as well, should their wallets get hacked.
 
  
 
=== Custody ===
 
=== Custody ===
  
The company's custodial service, Bakkt Warehouse, is a qualified digital asset custodian. It began accepting customer deposits and withdrawals of bitcoin on September 6, 2019, as announced on August 28.<ref>{{cite web|url=https://cointelegraph.com/news/bakkt-warehouse-launches-deposits-and-withdrawals-as-planned|name=Bakkt Warehouse Launches Deposits and Withdrawals as Planned|org=Cointelegraph|date=September 6, 2019}}</ref>
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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."<ref>{{cite web|url=https://www.dfs.ny.gov/reports_and_publications/press_releases/pr1908161|name=FINANCIAL SERVICES SUPERINTENDENT LINDA A. LACEWELL ANNOUNCES DFS GRANTS CHARTER TO BAKKT|org=New York Department of Financial Services|date=September 12, 2019}}</ref> Bakkt refers to this service as Bakkt Warehouse.
 
 
== History ==
 
 
 
In August 2018, ICE announced that they had begun creating a new company called Bakkt, which would aim to provide a federally-regulated market for [[bitcoin]] and other [[digital assets]].<ref>{{cite web|url=https://in.reuters.com/article/us-ice-cryptocurrency-bakkt/nyse-owner-ice-to-form-new-company-for-digital-assets-idINKBN1KO1QN|name=NYSE-owner ICE to form new company for digital assets|org=Reuters|date=August 3, 2018}}</ref> The company has said that it was working with a group of organizations including [http://www.marketswiki.com/wiki/The_Boston_Consulting_Group Boston Consulting Group], Microsoft, and Starbucks, to create an integrated platform that enables consumers and institutions to buy, sell, store and spend bitcoin on a global network.<ref>{{cite web|url=http://fortune.com/longform/nyse-owner-bitcoin-exchange-startup/|name=The NYSE's Owner Wants to Bring Bitcoin to Your 401(k). Are Crypto Credit Cards Next?|org=Fortune|date=August 3, 2018}}</ref>
 
 
 
In October 2018, Adam White, the "fifth employee" of [[Coinbase]], announced he was leaving the company. Less than a week later, it was announced that White would be serving as the COO of Bakkt.<ref>{{cite web|url=https://www.theblockcrypto.com/2018/10/11/coinbases-adam-white-is-joining-bakkt-as-its-coo/|name=Coinbase’s Adam White is joining Bakkt as its COO|org=The Block|date=October 12, 2018}}</ref>  
 
  
The launch date for the Bakkt Bitcoin Daily Futures Contract was originally set for December 12, 2018. In November 2018, ICE announced that the launch of Bakkt would be delayed so that the company could secure "warm wallet insurance" for Bakkt's infrastructure.<ref>{{cite web|url=https://www.forbes.com/sites/rebeccacampbell1/2018/11/21/ice-postpones-bakkts-bitcoin-futures-launch-to-january-2019/#150ed8ec2e27|name=ICE Postpones Bakkt's Bitcoin Futures Launch To January 2019|org=Forbes|date=November 21, 2018}}</ref> According to Bakkt CEO [[Kelly Loeffler]], the company also hopes to help develop the cryptocurrency market infrastructure by building Bakkt off of existing futures market practices. Loeffler said that ICE intends to design Bakkt to function as a regulated futures market, rather than an unregulated cryptocurrency [[exchange]].<ref>{{cite web|url=https://cryptonewsreview.com/bakkt-ceo-explains-how-it-will-build-on-existing-futures-infrastructure/|name=Bakkt CEO explains how it will build on existing futures infrastructure|org=Crypto News Review|date=September 21, 2018}}</ref>  
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According to a September 9, 2019 Tweet from Bakkt, "Bitcoin deposited at our Warehouse is protected by a $125 million insurance policy."<ref>{{cite web|url=https://twitter.com/Bakkt/status/1171040208105758720|name=Twitter|org=Twitter|date=September 13, 2019}}</ref>
  
In March 2019, the Wall Street Journal reported that Bakkt's launch would be delayed further due to disagreements with the CFTC on how to regulate the platform. The discussion includes possible alternative ways for Bakkt to settle its bitcoin futures contracts in a way that will be regulatable under existing laws. An ICE spokesperson said that ICE was "working through the regulatory review process, and are looking forward to updating the market soon."<ref>{{cite web|url=https://www.wsj.com/articles/bitcoin-futures-launch-hits-regulatory-snag-11553204037?mod=e2tw|name=Bitcoin Futures Launch Hits Regulatory Snag|org=The Wall Street Journal|date=March 22, 2019}}</ref> Around the same time in March, ICE announced that its valuation had reached $740 million following a Series A funding round in which it raised $180 million in 2018.<ref>{{cite web|url=https://cointelegraph.com/news/bakkt-gets-740-million-valuation-but-investors-have-questions-sources-reveal|name=Bakkt Gets $740 Million Valuation But Investors Have Questions, Sources Reveal|org=Cointelegraph|date=March 22, 2019}}</ref><ref>{{cite web|url=https://www.theblockcrypto.com/2019/03/21/bakkt-raises-series-a-at-valuation-topping-700-million/|name=Bakkt raises Series A at valuation topping $700 million|org=The Block|date=March 22, 2019}}</ref> The investors included ICE, Boston Consulting Group, [[Galaxy Digital]], Goldfinch Partners, Alan Howard, Horizons Ventures, and Pantera Capital.<ref>{{cite web|url=https://cointelegraph.com/news/nyse-operators-crypto-platform-bakkt-completes-1825-million-funding-round|name=NYSE Operator’s Crypto Platform Bakkt Completes $182.5 Million Funding Round|org=Cointelegraph|date=March 22, 2019}}</ref>
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=== "Bakkt Futures" ===
  
According to a document provided to ICE's technology and operations group and leaked to the press in July 2019, ICE was planning a third-quarter launch of trading in its daily and monthly deliverable bitcoin futures contracts. Approvals for its clearing arrangements from the CFTC and the New York State Department of Finance were still pending at the time that the document became public.<ref>{{cite web|url=https://www.altcoinbuzz.io/crypto-news/product-release/bakkt-reportedly-plans-to-launch-bitcoin-futures-exchange-in-q3/|name=Bakkt Reportedly Plans to Launch Bitcoin Futures Exchange in Q3|org=Altcoin Buzz|date=July 29, 2019}}</ref>
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On August 16, 2019, Loeffler announced on Bakkt's blog that ICE's physically-delivered bitcoin futures, commonly referred to as "Bakkt futures,"  would launch trading on September 23, 2019.<ref>{{cite web|url=https://medium.com/bakkt-blog/cleared-to-launch-8dfc3e6f9ed0|name=Cleared to Launch|org=Bakkt Blog|date=August 16, 2019}}</ref> Bakkt Warehouse executes the final deliveries on ICE US Futures exchange'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 US, which clears the futures contracts, matches buyers and sellers with open positions and provides delivery instructions to Bakkt. The market participants who are the beneficial owners of those positions must have accounts at Bakkt in order to receive or pay bitcoin.<ref>{{cite web|url=https://www.cftc.gov/sites/default/files/filings/ptc/19/05/ptc051319iceusdcm001.pdf|name=Product Certification|org=Commodity Futures Trading Commission|date=September 13, 2019}}</ref>
  
On August 16, 2019, Loeffler announced on Bakkt's blog that Bakkt's physically-delivered bitcoin futures and custody services would launch on September 23, 2019.<ref>{{cite web|url=https://medium.com/bakkt-blog/cleared-to-launch-8dfc3e6f9ed0|name=Cleared to Launch|org=Bakkt Blog|date=August 16, 2019}}</ref> On September 6, 2019, Bakkt's custody service, Bakkt Warehouse, began accepting customer deposits and withdrawals of bitcoin.<ref>{{cite web|url=https://cointelegraph.com/news/bakkt-warehouse-launches-deposits-and-withdrawals-as-planned|name=Bakkt Warehouse Launches Deposits and Withdrawals as Planned|org=Cointelegraph|date=September 6, 2019}}</ref>
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Bakkt's bitcoin futures initially saw very low trading volume. 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. That includes its daily bitcoin futures contract, of which only 5 were traded. To contrast this, the CME Group's bitcoin futures traded 4099 contracts - each of which are worth 5 bitcoins - on September 27 alone. Dave Weisberger, CEO of CoinRoutes, said that it was too early to totally write off Bakkt, because it takes time for traders to migrate between platforms. He also said, "these things tend to develop slowly."<ref>{{cite web|url=https://www.coindesk.com/trading-volume-for-bakkts-bitcoin-futures-totaled-just-5-million-in-first-week|name=Trading Volume for Bakkt’s Bitcoin Futures Hit Just $5 Million in First Week|org=Coindesk|date=October 2, 2019}}</ref>
  
 
== Key People ==
 
== Key People ==

Latest revision as of 12:42, 2 October 2019

WedbushFutures-200px.gif


Bakkt
Bakkt.jpg
Founded 2018
Headquarters Atlanta, Georgia
Key People Kelly Loeffler, CEO; Adam White, COO; Mike Blandina, Chief Product Officer
Employees 10 - 50
Products Cryptocurrency custody
Twitter @Bakkt
LinkedIn Profile
Facebook bakktapp
Website Bakkt Home
Blog Bakkt Blog

Bakkt is a digital assets custody service created by and affilated with Intercontinental Exchange (ICE).[1]

Overview

Bakkt's formation was announced by ICE on August 3, 2018. The company named Microsoft and Starbucks as partners.[2]

Bakkt said at the time that it would launch unmargined deliverable futures trading in November 2018.[3] In a company blog post dated November 20, 2018, however, the company said that the launch of futures trading was delayed until January 24, 2019, as Bakkt continued to work with the U.S. Commodity Futures Trading Commission to gain its approval.[4] 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.[5]

Bakkt announced that it had received investments of $182.5 million on December 31, 2018. 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.[6] In the following February, leveraging Bakkt's fame an unidentified individual sent emails trying to attract potential investors for a second round of investments in Bakkt in a blatant scam. The emails asked recipients to register names, email addresses and wallet addresses at bakktplatform.io.[7]

Kelly Loeffler, spouse of ICE CEO Jeffrey Sprecher, is the CEO of Bakkt. In October 2018, Bakkt announced that Adam White, was the fifth employee hired by Coinbase, would join as COO.[8] In April 2019, Bakkt announced that it had hired PayPal and Google veteran Mike Blandina as Chief Product Officer.[9] 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.[10]

Bakkt announced its five-member board of directors on March 29, 2019. The members include 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.[11]

On September 23, 2019, Bakkt finally launched.[12][13] As of 11 AM EST, Bakkt had sold 38 bitcoin futures contracts. By this time, the price of bitcoin had fallen 2.4 percent since the beginning of the day.[14]

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."[15] 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."[16]

"Bakkt Futures"

On August 16, 2019, Loeffler announced on Bakkt's blog that ICE's physically-delivered bitcoin futures, commonly referred to as "Bakkt futures," would launch trading on September 23, 2019.[17] Bakkt Warehouse executes the final deliveries on ICE US Futures exchange'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 US, which clears the futures contracts, matches buyers and sellers with open positions and provides delivery instructions to Bakkt. The market participants who are the beneficial owners of those positions must have accounts at Bakkt in order to receive or pay bitcoin.[18]

Bakkt's bitcoin futures initially saw very low trading volume. 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. That includes its daily bitcoin futures contract, of which only 5 were traded. To contrast this, the CME Group's bitcoin futures traded 4099 contracts - each of which are worth 5 bitcoins - on September 27 alone. Dave Weisberger, CEO of CoinRoutes, said that it was too early to totally write off Bakkt, because it takes time for traders to migrate between platforms. He also said, "these things tend to develop slowly."[19]

Key People

References