Bakkt is a US-based centralized derivatives exchange platform, a child company launched by Intercontinental Exchange in September 2019. Bakkt primarily targets institutional players and merchants striving to provide them with a secure ecosystem for managing digital assets.
The company standing behind Bakkt’s creation, Intercontinental Exchange, is a global enterprise owning multiple exchanges that operate in financial and commodities markets across the globe. At the time of writing, there are 12 regulated exchanges and marketplaces under its governance including ICE futures exchanges in the US, Canada, and Europe, the Liffe futures exchanges in Europe (London International Financial Futures and Options Exchange), the New York Stock Exchange and some others within the equity and OTC energy markets.
In August 2018, the financial giant announced the upcoming launch of a new project Bakkt aiming to cover the digital assets area. Bakkt declared to be working with federally regulated markets, warehouses, merchants and consumer applications providing them with a tool for trading Bitcoin versus fiat currencies. Microsoft, Starbucks, Boston Consulting Group and other big companies were mentioned in the list of its partners.
During the first round of funding in December 2018, in addition to the companies mentioned above, Bakkt attracted some other reputable investors such as Pantera Capital, PayU, Naspers and some others. The company raised 182.5 million USD then. The official announcement of the company’s launch took place on May 13th, 2019. With such strong business and governmental support, Bakkt Trust Company LLC is registered with Financial Crimes Enforcement Network (“FinCEN”) and is fully compliant with its regulations.
Trading crypto assets and futures on Bakkt
In order to meet market needs, Bakkt develops a platform with an intuitive interface to facilitate the trading process and let its users buy, sell, store and spend digital assets. The platform targets to connect merchants, customers, and investors in a cost-effective and convenient manner.
Apart from cryptocurrencies and various digital assets, the platform supports futures trading to help its customers diversify their investment portfolio. On December 9th, 2019, Bakkt launched the first regulated BTC options and cash-settled futures in the US as the platform’s CEO Kelly Loeffler entered the senate. Bakkt Bitcoin (USD) Monthly Options became available for the US market while Bakkt Bitcoin (USD) Settle Futures got open on ICE Futures Singapore. The products proved to be quite successful from the very start as only in a few hours since the launch, more than 1,000 futures contracts had been processed in Asia alone.
Bakkt aims to make futures available for trading across more than 30 different countries. In order to get access to this trading tool, investors have to submit relevant documents and pass the KYC (Know-Your-Customer) procedure and AML (anti-money laundering) check following the CFTC’s (Commodity Futures Trading Commission) requirements.
However peculiar it may sound, Bakkt has limitations on trading hours. Its PDF guide with frequently asked questions claims that trading hours on Bakkt are 8:00 p.m. EPT to 6:00 p.m. EPT Sunday to Friday which comes against the principles of cryptocurrency availability. However, considering the heavy regulatory burden imposed on the platform, such limitations can be justified.
How Bakkt provides the security of its customers’ funds
Since Bakkt works primarily with merchants and institutional investors, the question of the funds’ security is on top of its priority list. Users’ funds are stored on Bakkt’s cold wallets providing them with first-class physical and cyber-security. Also, the platform claims that the keys to their clients’ cold wallets are stored in an encrypted way within “bank-grade” vaults. On its website, Bakkt notes that both cold and warm wallets are backed by a 125 million USD insurance policy.
In addition, Bakkt implements such security measures as multi-factor authentication, role-based permissions for business accounts and destination address whitelisting. So far, all these measures have proved to be reasonable as Bakkt has never been hacked.
Every new customer is obliged to pass the KYC-procedure and submit AML documents as the platform is subject to regular compliance checks and financial audits including SOC certifications (system and organization controls). Transactions are closely monitored by Bakkt’s development team via numerous analytics tools to prevent any malicious actions.
Bakkt’s team and partners
At the time of writing, Mike Blandina is listed as the company’s CEO on Bakkt’s website. With diverse experience in eCommerce, debit/credit, wallets, issuance and settlement, Mike is quite a strong specialist and a C-level leader. Throughout his career, he has worked in such companies as PayPal, Google, TxVia (acquired by Google), Westfield, OneMarket, American Express, and First Data Corporation.
Adam White is the President of Bakkt. He holds an MBA degree at Harward Business School. In 2013-2018, he had been heading Coinbase, one of the leading platforms for purchasing and storing Bitcoin and other cryptocurrencies.
As for Bakkt’s partners, the list is quite impressive as it consists of the world’s IT leaders. In a press release published in August 2018, ICE announced its partnership with Microsoft Cloud Solutions to develop the ecosystem for crypto assets. Other famous partners and investors have already been mentioned above.
Throughout its existence, Bakkt has acquired some other companies, too. In January 2019, it set an agreement with Rosenthal Collins Group (RCG). In April 2019, the announcement of Digital Asset Custody Company (DACC) acquisition followed. In February 2020, ICE announced its plant to acquire Bridge2 Solutions, a leading provider for customers and merchants.