NYSE-backed Bakkt considers sale amid crypto shake-up

Bakkt Holdings, the digital asset marketplace established by the parent company of the New York Stock Exchange (NYSE), is reportedly considering a potential sale amidst a surge in crypto-related activities. According to sources cited by BNN Bloomberg, the company has engaged a financial advisor to evaluate various strategic options, including the possibility of a breakup. However, no final decision has been made, and Bakkt may ultimately choose to remain independent.

Intercontinental Exchange, which owns the NYSE and prominent futures markets, launched Bakkt to much fanfare in 2018. The company initially announced high-profile partnerships with Starbucks Corp. and Microsoft Corp., which garnered significant attention and positioned Bakkt as a promising player in the crypto space. The founding CEO, Kelly Loeffler, later transitioned to a political career, serving as a US Senator from Georgia, further boosting the company’s profile.

Despite its strong start, Bakkt faced significant challenges. Earlier this year, the company disclosed concerns about its ability to continue operating as a going concern, raising the possibility of delisting from the NYSE. This situation underscored the volatility and unpredictability inherent in the digital asset market. However, Bakkt continues to offer a comprehensive range of services, including trading and custody, during a period of consolidation within the sector. This phase is marked by a resurgence in crypto prices nearing record highs, contrasting with the aftermath of the industry-wide meltdown experienced two years ago.

In recent news, Robinhood Markets Inc. announced its acquisition of the European crypto exchange Bitstamp, while Riot Platforms Inc., one of the largest Bitcoin miners, proposed a takeover of its rival, Bitfarms. These moves highlight the dynamic and competitive nature of the crypto industry, where companies are actively seeking to expand their market share. Bakkt itself went public in 2021 through a merger with a blank-check vehicle, also known as a SPAC (Special Purpose Acquisition Company). Despite reporting a first-quarter loss of $21 million on revenue of $855 million, Bakkt continues to pursue growth opportunities.

On Friday, Bakkt unveiled a partnership with Crossover Markets to develop a crypto electronic communication network (ECN), further expanding its offerings. This partnership aims to enhance liquidity and trading efficiency in the crypto market, aligning with Bakkt’s strategy to provide robust trading infrastructure.

Bakkt’s possession of the coveted BitLicense from the New York State Department of Financial Services strengthens its position in the digital asset platform landscape. This license allows Bakkt to operate legally in New York, one of the most stringent regulatory environments for cryptocurrency. Other major participants in the industry with similar clearances include Coinbase Global Inc., stablecoin issuer Circle, and Jack Dorsey’s digital payment firm Square. Following the news of its potential strategic options, Bakkt’s shares surged 15%, reaching $22.33 on Friday. This marked a 27% increase over the week, resulting in a current market valuation of approximately $300 million. However, it is worth noting that the stock has declined by around 30% over the past year, reflecting broader market challenges.

In November 2023, Bakkt announced its expansion into both international and domestic markets, detailing plans to extend cryptocurrency capabilities across numerous global markets. This expansion aims to service both existing partnerships and new clients, emphasizing Bakkt’s commitment to growth despite the volatile market conditions. Trading volume on major cryptocurrency exchanges experienced a significant decline in April, coinciding with Bitcoin’s retreat from its all-time high. Additionally, derivatives trading volume saw its first decrease in seven months, falling by 26.1% to $4.57 trillion. These trends reflect the broader market dynamics that Bakkt must navigate as it evaluates its future strategic direction.