Bakkt, the digital assets platform owned by Intercontinental Exchange (ICE), was launched in 2018 with the promise of revolutionizing the cryptocurrency market. The platform aimed to bridge the gap between traditional financial institutions and the world of digital assets by offering a fully regulated and institutional-grade platform for trading, storing, and spending cryptocurrencies. However, Bakkt’s progress has been slow, and many have questioned whether the platform still has a chance of success.
Despite the challenges faced by Bakkt, there are several reasons why the platform still has a chance of success. One of the most significant factors in Bakkt’s favor is its ownership by Intercontinental Exchange. ICE is a well-established and respected company in the financial industry, with a track record of successful ventures in trading and clearing. As such, Bakkt benefits from the expertise and reputation of its parent company, which could help to attract institutional investors and other market participants. Another factor in Bakkt’s favor is its focus on regulation and compliance.
The platform has gone to great lengths to ensure that its products and services comply with regulatory requirements, including obtaining a BitLicense from the New York State Department of Financial Services. This focus on compliance could help to build trust with institutional investors who may be wary of the regulatory risks associated with the cryptocurrency market. Additionally, Bakkt has continued to develop and expand its product offerings since its launch. In 2019, the platform launched its physically settled Bitcoin futures contracts, which allow traders to receive the underlying Bitcoin upon expiration of the contract. This is in contrast to cash-settled futures contracts, which pay out in cash rather than the underlying asset.
Physically settled futures contracts are seen as a more reliable and secure way to trade cryptocurrencies, which could help to attract institutional investors who require more stringent risk management measures. Bakkt has also made significant progress in its efforts to enable the use of cryptocurrencies in everyday transactions. In 2020, the platform launched its Bakkt Cash app, which allows users to convert their cryptocurrencies into cash and spend them at participating merchants.
This could help to address one of the biggest challenges facing cryptocurrencies, which is the lack of mainstream adoption and usability. Furthermore, Bakkt has announced plans to launch a consumer-facing app that will allow users to purchase, store, and spend cryptocurrencies more easily. The app, which is expected to launch in the first half of 2021, could help to attract a new wave of retail investors to the cryptocurrency market. Finally, the ongoing growth and maturation of the cryptocurrency market could also work in Bakkt’s favor. Despite the volatility and uncertainty of the cryptocurrency market, there has been a steady increase in institutional interest and adoption in recent years.
Many financial institutions and hedge funds are now investing in cryptocurrencies or exploring ways to incorporate them into their portfolios. As such, there is a growing demand for institutional-grade infrastructure and services, which Bakkt is well-positioned to provide. In conclusion, while Bakkt has faced its fair share of challenges since its launch, there are several reasons why the platform still has a chance of success. Its ownership by Intercontinental Exchange, focus on regulation and compliance, and expansion of product offerings and services could all help to attract institutional investors and build trust with market participants. Additionally, the ongoing growth and maturation of the cryptocurrency market could create new opportunities for Bakkt to establish itself as a leading player in the industry.