Digital asset marketplace Bakkt will be made public on the New York Stock Exchange in 2021, which could pave the way for more cryptocurrency service providers to follow suit. The Intercontinental Exchange announced on January 11 that its cryptocurrency marketplace Bakkt would do just that soon to be listed on the NYSE public stock market. This will be done through a merger with VPC Impact Acquisition Holdings, a specialty acquisition company.
The vacant company will be used to merge with Bakkt to be listed on the stock exchange without an initial public offering. Initial reports suggest that Bakkt will be valued at more than $ 2 billion after the merger, and the exchange plans to raise an additional $ 532 million to support the ongoing development of its application, a wallet and rewards app for retail users. finance, which is expected to be launched in March.
The company has indicated that the merger is expected to be completed in the second quarter of 2021. This makes the newly formed Bakkt Holdings Inc. listed on the NYSE.
Much has been made of the investor presentation that was submitted to the US Securities and Exchange Commission. The document outlines the potential for the cryptocurrency market to be valued at $ 3 billion by 2025, supporting the potential value of the space in the coming years. The total cryptocurrency market cap was $ 1 trillion for the first time in January 2021.
Gavin Michael, CEO of Bakkt, told Cointelegraph that the merger makes sense given the amount of capital already poured into the cryptocurrency space and the potential growth it predicts over the next three years:
Bakkt and VPC believe there is tremendous potential in building a marketplace for the nearly $ 2T of digital assets that exist today and the many others that will be created as such a marketplace exists for both brands and consumers. “
Michael added that the merger will give Bakkt access to the capital needed to expand and provide consumers with more opportunities to unlock trillions of dollars held in various digital assets. The company also expects to benefit from the brand recognition that will come from becoming a public company.
A sign of things to come?
Mati Greenspan, crypto analyst and founder of consulting firm Quantum Economics, told Cointelegraph that the timing of the merger and Bakkt’s decision to go public is not surprising given that cryptocurrency markets are currently booming.
Noting that the move will undoubtedly be lucrative for Bakkt, Greenspan also agreed that the push to go public is an indication that the traditional financial industry is beginning to recognize cryptocurrency and blockchain-focused companies as mature and valuable: “It is a reflection of where these companies are in their life cycle and how it coincides with the traditional market’s willingness to accept them.”
While some large institutional investors like this MicroStrategy have with them billion dollars purchases of Bitcoin (BTC) in recent months, Greenspan emphasized the effectiveness of diversifying investments in space. While holding cryptocurrencies is a direct way to gain exposure to the ecosystem, Greenspan said investing in the right companies could potentially be more beneficial:
“There is a natural need for all investors to be as diverse as possible. Just as someone whose portfolio is made up of gold would also invest in mining stocks or an oil magnate investing in his own industry. Often times, investing directly in a business can be more lucrative than buying a token whose value is unknown. “
Joel Edgerton, chief operating officer of US-based cryptocurrency exchange bitFlyer, told Cointelegraph that the timing of the IPO was opportune, given current market heights and a strong interest in cryptocurrencies. He also offered an alternative stance on the reasons behind the continued rise, suggesting that small investors and independent companies are driving the cryptocurrency boom: “Coinbase and Bakkt are taking advantage of the IPO window to give their investors an exit event and the subsequent to use publicity. of their early steps to strengthen their brands. “
Edgerton also believes in the tendency for savvy investors to fund companies involved in the cryptocurrency space without actually buying BTC or other altcoins. The lack of options for getting wide exposure to cryptocurrency also plays a role:
“There is a clear need among investors to gain exposure to the cryptocurrency space by investing in crypto companies, without directly holding cryptocurrency assets. […] Buying stocks and benefiting indirectly from the growth in the industry is certainly attractive. Since there is still no easy-to-purchase crypto ETF or mutual fund, crypto companies are becoming a cryptocurrency proxy investment. “
Ben Caselin, head of research and strategy for digital asset exchange AAX, told Cointelegraph that Bakkt’s move does not necessarily reflect recognition from the wider financial industry. Contrary to Greenspan and Edgerton’s sentiments, Caselin also emphasized the fact that when it is eventually publicly traded, shareholders of Bakkt believe the stock exchange will be successful in the future. While this is intrinsically linked to the cryptocurrency markets, Caselin draws a clear line between investing directly in cryptocurrencies and exchanges:
“It is important to understand that investing in a cryptocurrency exchange is not a substitute for holding real digital assets or trading futures. It’s basically a way to gain exposure to the broader industry, but more specifically, owning Coinbase or shares in Bakkt rests on the assumption that this particular exchange will thrive in the years to come. “
IPOs and mega deals
Bakkt and Coinbase have seemingly been ahead in the race to access public funding and publicity as they try to build on their current offering. Despite Bitcoin hitting new record highs on several occasions in recent weeks, Edgerton believes that the space is still in its infancy and that investment by the general public will become a major driver of growth over the next decade: “IPOs are clearly a major source of funding. and a successful IPO should also encourage VCs to invest in the next great crypto unicorn. ”
Greenspan also sees more multi-billion dollar deals on the horizon for the cryptocurrency space, while suggesting that some of these may just be done using the burgeoning technology driving the future of the financial world: “As the industry grows, there will be many more crypto-related mega deals. Perhaps all IPOs, acquisitions and mergers will soon be using distributed ledger technology. ”