The launch of Bakkt in 2019 marked a pivotal moment in the evolution of digital asset markets. As a venture backed by the New York Stock Exchange (NYSE) parent company Intercontinental Exchange (ICE), Microsoft’s M12, Galaxy Digital, and other institutional heavyweights, Bakkt was poised to bridge traditional finance with the crypto economy. Its mission? To establish a regulated, secure, and scalable platform for institutional participation in bitcoin trading — and potentially shift bitcoin’s pricing power from decentralized exchanges to Wall Street.
This article explores Bakkt’s delayed but determined market entry, its regulatory and security framework, early performance challenges, product expansion, and broader implications for the future of crypto adoption.
The Genesis of Bakkt: Institutional Backing and High Expectations
On August 3, 2018, ICE announced plans to launch Bakkt, a cryptocurrency exchange and custody platform. By year-end, it had secured $182.5 million in funding from a consortium of elite investors, including:
- M12, Microsoft’s venture fund
- Boston Consulting Group
- PayU, fintech arm of Naspers
- Horizons Ventures, linked to Li Ka-shing
- Galaxy Digital, founded by Mike Novogratz
This high-profile backing fueled speculation that Bakkt would become the long-awaited gateway for institutional capital into crypto — a “bull market catalyst” capable of legitimizing digital assets on Wall Street.
With ICE operating 14 regulated exchanges and five clearing houses across commodities, energy, and financial instruments, its entry into crypto signaled a major shift. In 2018 alone, ICE reported $5 billion in consolidated net revenue — more than any other exchange group globally.
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Regulatory Strategy: Building Trust Through Compliance
Unlike most crypto platforms, Bakkt positioned itself from day one as a federally regulated, institution-first marketplace. To achieve this, it pursued multiple regulatory milestones:
- Applied to the New York Department of Financial Services (NYDFS) to become a trust company, enabling it to serve as a qualified digital asset custodian
- Sought approval from the Commodity Futures Trading Commission (CFTC) to operate a compliant bitcoin futures exchange
- Leveraged ICE’s existing regulated clearing house for settlement services
- Developed custom security infrastructure, including hardened wallets, key management systems, physical protection, cybersecurity protocols, and anti-collusion controls
These efforts were designed to address the core concerns of institutional investors: security, compliance, and counterparty risk.
Kelly Loeffler, former CEO of Bakkt and ex-ICE executive, emphasized that the name "Bakkt" is derived from “backed” — as in asset-backed securities — reflecting its goal of anchoring digital assets in trusted financial frameworks.
A Rocky Start: Underwhelming Initial Trading Volumes
Despite robust preparation, Bakkt’s market debut on September 23, 2019, fell flat. The platform launched two physically delivered bitcoin futures contracts, but first-day trading volume was just 72 contracts (each representing 1 BTC), totaling around $600,000.
Compared to CME Group’s bitcoin futures — which averaged $45 million daily at the time — Bakkt’s volume was 75 times smaller, raising doubts about its ability to attract institutional liquidity.
Market analysts pointed to several factors:
- Limited awareness among traders
- High barriers to onboarding for institutions
- Lack of immediate arbitrage opportunities due to price alignment with spot markets
- Delayed launch timing (nearly a year behind schedule)
Yet beneath the surface, momentum was quietly building.
Quiet Resurgence: From Cold Start to Steady Growth
By late October 2019, signs of recovery emerged. On October 25, Bakkt’s monthly futures contract volume surpassed **$10 million** for the first time. Over the next two months, it recorded **26 days** with over $10 million in daily volume.
The turning point came on December 18, when Bakkt traded 6,601 contracts — equivalent to $47.3 million — nearly 80 times its launch-day volume.
Even more impressive: this growth occurred during a period when bitcoin’s price dipped below $7,000**. Weekly data showed that the week of December 18 crossed the **$100 million threshold in cumulative volume — a 41% increase from the previous week.
📈 Key Growth Milestones:
- Sept 23: ~$600K daily volume
- Oct 25: First $10M+ day
- Dec 18: $47.3M peak (6,601 contracts)
- Dec 20: 26+ days above $10M threshold
This trajectory suggested growing confidence among professional traders and institutions.
Product Expansion: Options and Cash-Settled Contracts
To broaden its appeal, Bakkt launched two new products on December 9, 2019:
Cash-Settled Monthly Bitcoin Futures
- Designed for traders who prefer not to hold physical BTC
- First-day volume: 1,268 contracts
Monthly Bitcoin Options Contracts
- First CFTC-approved bitcoin options product
- Enabled hedging and structured strategies
- Initial block trade executed on December 12 with participation from Galaxy Digital and XBTO
Adam White, COO of Bakkt (and later CEO), stated the vision was to mirror ICE’s success with Brent Crude Oil Futures — creating a comprehensive suite of standardized, liquid derivatives for digital assets.
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Beyond Trading: Custody and Consumer Payments
Bakkt’s ambitions extend far beyond futures. The company has built a full-stack ecosystem covering:
🔐 Institutional Custody
- Bakkt Warehouse: A digital asset custodian combining proprietary tech with assets acquired from DACC
- NYDFS trust charter holder
- Partnered with BNY Mellon for banking and custody integration
💳 Consumer Payments
- Announced in October 2019: A consumer app launching in H1 2020
- Starbucks revealed as first major partner (later confirmed to hold equity in Bakkt)
- Hired Chris Petersen from Google in June 2019 to lead development of Bakkt Pay, a crypto-enabled payment wallet
This vertical integration — from trading and clearing to custody and real-world spending — positions Bakkt as a potential end-to-end financial network for digital assets.
Frequently Asked Questions (FAQ)
Q: What is Bakkt?
A: Bakkt is a digital asset platform launched by Intercontinental Exchange (ICE), offering regulated bitcoin futures, options, custody solutions, and consumer payment applications.
Q: Is Bakkt regulated?
A: Yes. Bakkt operates under oversight from the CFTC and holds a trust charter from the NYDFS, making it one of the most compliant crypto platforms in the U.S.
Q: How does Bakkt differ from other crypto exchanges?
A: It focuses exclusively on institutional-grade security, regulatory compliance, and integration with traditional financial infrastructure — unlike most retail-focused exchanges.
Q: Why did Bakkt delay its launch?
A: Regulatory approvals, technical development of secure custody systems, and coordination with clearing partners contributed to multiple delays before its September 2019 launch.
Q: Can individuals trade on Bakkt?
A: Initially focused on institutions, Bakkt planned retail access via its consumer app (launched later), allowing users to convert crypto into spendable dollars at partner merchants like Starbucks.
Q: Did Bakkt succeed in taking bitcoin pricing power from other exchanges?
A: Not immediately. While volumes grew steadily in late 2019, CME and offshore exchanges like Binance still dominated price discovery. However, Bakkt laid foundational infrastructure for future influence.
Conclusion: A Strategic Long Game
While Bakkt’s early performance was underwhelming, its consistent growth by year-end demonstrated resilience and strategic foresight. By prioritizing regulation, security, and ecosystem development, Bakkt didn’t just launch another exchange — it built an institutional bridge into crypto.
Its 2019 journey reflects a broader trend: the gradual institutionalization of digital assets. Though bitcoin pricing power remains distributed, platforms like Bakkt are positioning Wall Street to play an increasingly central role.
As adoption accelerates and regulatory clarity improves, the infrastructure laid in 2019 may prove foundational for the next era of finance.