Bakkt: ICE Crypto Exchange Going Public

Bakkt, the crypto exchange launched by outgoing Sen. Kelly Loeffler (R-GA), is going public through a Special Purpose Acquisition Company (SPAC). The deal values Bakkt at $2.1 billion.

stck of coins and the letters ipo
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Victory Capital Holdings (NASDAQ:VCTR) created the vehicle, VPC Impact Acquisition Holdings (NASDAQ:VIH). But the new company will be listed on the New York Stock Exchange. Intercontinental Exchange (NYSE:ICE), the majority owner of Bakkt, owns the NYSE.

Bakkt was founded as a vehicle for mainstreaming Bitcoin and similar assets by Loeffler, then head of investor relations for ICE. She joined the company soon after its founding in 2002 and later married CEO Jeff Sprecher. SEC documents show the company based at ICE offices outside Atlanta.

But Loeffler’s name doesn’t appear in Victory’s presentation on Bakkt. She was appointed to the U.S. Senate a year ago but recently lost her race to Democrat Raphael Warnock. ICE employees were said to be her largest campaign contributors.

What is Bakkt?

Bakkt is described as a “digital assets marketplace” built on a wallet app that currently supports 30 loyalty programs and 200 gift cards. Starbucks (NASDAQ:SBUX) has integrated Bakkt Cash as a method for reloading its mobile payment app.

Under the deal, new investors get 8% of the equity, pre-IPO Equity (PIPE) investors get 12%, Victory gets 2% as the sponsor, and current investors get 78%. ICE will have what’s termed a “minority interest” of 65%. Other PIPE investors include Starbucks, Microsoft’s (NASDAQ:MSFT) M12, the Boston Consulting Group, and PayU, a payment gateway whose home page says it hasn’t operated in the U.S. before.

The deal provides Bakkt with $574 million in cash. The company can use it. ICE reported $9 million in revenue related to Bakkt in the December quarter, with a loss under Generally Accepted Accounting Principals (GAAP) of $39 million.

About 100,000 now use the app, according to the Victory document, but 350,000 are waiting to be turned on to it. A public launch is expected later this quarter.

The idea is that the app can combine various forms of payment into a single payment system. These include gift cards, in-game assets, loyalty points, airline miles, stocks and derivatives, and cryptocurrency. The alternative assets represented $1.6 trillion in value last year, according to the presentation, with a total addressable market of $5.1 trillion in 2025.

Bakkt Won’t Be Alone

Bakkt is coming public just after Coinbase, the largest crypto exchange, filed for its own public offering. At the time this was written Bitcoin is worth $38,139, a market cap of $710 billion. It represented about 70% of the crypto market.

Gavin Michael, recruited from Citigroup (NYSE:C) to be CEO, said Bakkt will support other crypto assets beyond Bitcoin. Notably Ripple (XRP), the fourth most-valuable crypto asset, is absent from the list. Its sponsors have been accused by regulators of selling XRP in an unregistered offering.

Bakkt won’t have the market to itself. Paypal (NASDAQ:PYPL) is rolling out support for crypto assets in its payment system. Paypal’s payment partner, Paxos, said it will seek guidance from regulators on what coins to support.

The Bottom Line

The key to Bakkt may be its roll-up of non-cash assets like loyalty programs and in-game points into the app. This provides the app with an asset base that goes well beyond crypto.

According to Victory’s presentation, over $1 trillion is currently locked in these assets, mostly in gift cards. The hope is these can be turned into growth for crypto, bringing it into the mainstream.

But even if they don’t, turning the excess value of these awards into spendable cash, through a single app, looks like a real business that may be worth your investment.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at, tweet him at @danablankenhorn, or subscribe to his Substack At the time of publication, Dana owned shares in MSFT.

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