ICE-backed Bakkt cleared to raise capital amid cash crisis

Digital asset firm Bakkt, which is owned by Intercontinental Exchange (ICE), has received the regulatory green light from the US Securities and Exchange Commission to raise up to $150 million.

The approval for a shelf registration, or shelf offering, comes at a critical time for the company, just a week after voicing concerns about its dwindling cash reserves. This mechanism enables Bakkt to issue new securities and sell them over time without seeking approval for each sale. The company plans to leverage this flexibility to gather $150 million in capital across multiple offerings over the next three years.

Founded by the parent company of the New York Stock Exchange in 2018, Bakkt had been pegged as a potential game-changer for Bitcoin during the 2018 bear market. However, recent financial disclosures reveal a company struggling to maintain its footing. Despite the crypto market’s recovery from a challenging 2022, Bakkt has reported eight consecutive quarters of net losses since becoming a publicly listed entity in October 2021.

The company’s financials highlight a losing streak of $44.9 million, $50.5 million, and $51.7 million across the first three quarters of 2023 alone, albeit better than the $1.59 billion and $323.9 million it lost in the latter half of 2022. Since the fourth quarter of 2021, Bakkt’s cumulative net losses have amounted to $2.26 billion.

Bakkt’s platform, which caters to institutional investors, has developed strategic partnerships with major corporations like Starbucks and Amazon Web Services to expand its digital asset transaction and service offerings. Despite these efforts and a 7.8% uptick in its share price to $1.03 ahead of the announcement, Bakkt’s shares have plummeted over 51% in 2024.

In 2021, Bakkt launched a digital wallet, which was subsequently discontinued in 2022, as the company shifted its focus towards crypto custody and trading services. Its broader initiative to use Bitcoin for payments has largely fallen short of expectations, although projects like the Lightning Network seek to upgrade transaction efficiency through layer-2 blockchain solutions.

In 2023, Bakkt cut support for 25 out of the 36 crypto tokens that were listed on its recently acquired trading platform, Apex Crypto. At the time, Bakkt didn’t provide a reason for the delisting, but the company was seeking to focus on a smaller number of more popular tokens. It also can be attributed to recent regulations and changes in the crypto industry.