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B2B fintech Bakkt (BKKT) trades in line with bitcoin

By Kevin Donovan

23:34, 25 January 2022

Bakkt executives at IPO
Bakkt is more a B2B fintech stock than cryptocurrency - Photo: Shutterstock

While its stock certainly trades in sympathy with bitcoin prices, digital asset platform Bakkt Holdings (BKKT) is at its heart a loyalty rewards company providing cryptocurrency service options for non-crypto native companies to, in turn, offer to consumers.

Primarily, Bakkt allows consumers to trade rewards points earned through customer loyalty rewards programs into cryptocurrency, namely bitcoin and ether, instead of a room upgrade during your next hotel stay.    

“We hold digital assets in custody on our partners’ behalf,” said Bakkt CEO Gavin Michael. “We are responsible for making sure assets are securely stored. We developed the vault.”

In fact, despite not publicly disclosing its cryptocurrency holdings, bitcoin and ether make up a small percentage of Bakkt’s overall financial profile, with gains on bitcoin sales making up just $1.1m (£0.81m) of income as part of its overall $29.9m 3Q 2021 quarterly loss on $9.1m in quarterly revenue.

Bakkt stock 

Bakkt went public via a SPAC merger with blank cheque firm VPC Impact Acquisition Holdings on 18 October in a transaction that raised $448m and a roughly $2.1bn valuation. Since Bakkt began trading its stock has virtually mirrored bitcoin prices, despite being more of a B2B financial services company than a pure-play crypto company.

Bakkt stock closed Tuesday at $3.90 per share, down 5.12% from Monday’s $4.11 per share closing price. Bakkt stock’s all-time high of $50.80 came in late October, as bitcoin was approaching all-time high prices. Bakkt trades over the NYSE under the ticker BKKT.

As a former unit of NYSE parent Intercontinental Exchange, the Bakkt Trust Co. Warehouse is regulated by the New York Dept. of Financial Services and is protected by the same cybersecurity measures as all Intercontinental Exchange-owned exchanges. additionally, Bakkt stores the majority of the digital assets it custodys offline in cold storage.

Additionally, Bakkt Marketplace is a registered Money Service Business with FinCEN and has a Bitlicense through the New York Dept. of Financial Services and is authorised to transmit money in 45 states, the District of Columbia and Puerto Rico.

Intercontinental Exchange still owns 68% of Bakkt equity, although per the merger agreement with VPC Impact votes as a 30% shareholder, Michael said.

Bakkt IPO proceeds are being invested back in the company, "heavily," noted Michael.

BTC/USD

69,687.95 Price
+5.050% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

US100

18,661.40 Price
+0.610% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 1.8

Gold

2,425.50 Price
+0.440% 1D Chg, %
Long position overnight fee -0.0192%
Short position overnight fee 0.0109%
Overnight fee time 21:00 (UTC)
Spread 0.50

XRP/USD

0.54 Price
+4.370% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168
Bakkt stock since IPOBakkt stock since IPO - Photo: Koyfin
Bitcoin since Bakkt IPOBitcoin since Bakkt IPO - Photo: Koyfin

Consumer-facing partners

Bakkt’s partnerships are with a wide range of consumer-facing companies, from Choice Hotels to Delta Air Lines to Starbucks.

“Digital assets are difficult to use across channels,” Michael said. “Offering crypto as a service, our partner companies are able to offer alternate redemption options for customer loyalty rewards points, providing more utility.”

Michael noted cryptocurrency as a redemption option for loyalty rewards points appeals to younger consumers.

Alpharetta, Georgia-based Bakkt brings the regulatory and compliance needs to partners otherwise unable to engage customers seeking cryptocurrency options. Michael describes Bakkt as a B2B2C, meaning it works with its business partners to offer services to consumers without itself necessarily dealing with customers.

Transparent to customers

Consumers serviced by Bakkt are most likely unaware of it. Through a recent partnership with MasterCard, partners – including merchants, banks and fintechs – in the United States to embrace and offer a broad set of cryptocurrency solutions and services. Consumers can use a MasterCard-branded bank credit or debit card to buy and sell digital assets through a Bakkt custodial wallet or purchase Starbucks coffee using cryptocurrency on the same MasterCard.

Mastercard users will get Bakkt's crypto-as-a-Service," added Michael. The goal is to bring together buy/sell/custody card processing, debit and credit cards in one package for Mastercard partners to launch a program on a "turnkey basis." 

Additional partnerships include Cantaloupe, Finastra, Fiserv, Google and Wyndham Worldwide Resorts.

Bakkt also has partnered with Manasquan Bank to offer cryptocurrency to its bank customers and gig-economy payment service BringMeThat.com, allowing delivery drivers to receive payment in digital assets through its Earn Crypto service.

Read more: Partnership with MasterCard sends Bakkt shares 51% higher

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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