Bakkt Crypto Exchange Reversed Their Initial Institutional Mandate

Bakkt recently announced a pivot to consumer-facing applications 
Appears Bakkt has completely turned its back on institutional offering
Bakkt recently acquired Bridge2 Solutions, a loyalty / reward points provider.
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Crytpo and Bitcoin Market Cap Story of Day

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With Crypto Markets In A Rare Quiet-Moment, We Are Taking The Opportunity To Address The Bakkt Series B Fundraising Round Which Was Announced Two Weeks Ago - The Company Appears To Have Fully Reversed From Their Initial Mandate Of Institutional Investor Focus But Has Still Managed To Raise A Jaw-Dropping Amount Of Funds

  • In the summer of 2018, Bakkt, deemed a cryptocurrency exchange and liquidity provider created by ICE, raised 182.5M. The investor group included Microsoft's venture arm and Boston Consulting Group, among others. At the time CEO Kelly Loeffler said, 'Our work today is centered on driving institutional access for digital assets along with merchant and consumer uses...'
     
  • Ultimately, after over a year of regulatory delays, the company released two bitcoin-settled futures products on the ICE platform in late 2019 that saw a muted response.
     
  • Since then the company announced a pivot to consumer-facing applications. The company's latest $300M round comes after the firm acquired Bridge2 Solutions, a loyalty / reward points provider.

Crypto Takeaway: 

With the latest round and acquisition, it appears as though Bakkt has completely turned its back on an institutional offering.

We have long said that we were skeptical of Bakkt's value proposition as 1) Their products focused on deliverable crypto instead of being cash-settled and 2) The company only offered passive investment vehicles on bitcoin and did not invest in the educational effort around where the alpha/trading opportunities are in the space.

Regardless, after such modest success attracting institutions to crypto, we are surprised the company was able to raise such a large round for a drastic pivot. Furthermore, while the company had a legitimate claim that they were attempting to go after an untouched market in institutional investors, both the retail crypto markets and reward markets are highly competitive spaces. We'd be curious to see the presentation that both explained away this major pivot and convinced investors to more than double down.

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About the Author

FRNT Financial is a technology and sales layer that offers institutional and accredited investors access to various forms of exposure to crypto-assets.