As recent sources close to the project tell The Block, Bakkt, ICE’s yet-to-launch crypto exchange, is planning to get itself valued somewhere in the $700 million range following its Series A funding round.
Bakkt can currently increase its pre-money assessment to $1 billion at its next increase. It can then sell a series of similarly priced favored shares without weakening itself much; in other words, it can raise considerable capital without giving up much equity.
ICE’s yet-to-launch cryptocurrency exchange increased by $182.5 million in 2018, diving into an expectations trading platform geared at organizations. Its estimated amount is $740 million post-money assessment, which means ICE might have sold 25% of shares to exterior investors such as Galaxy, Pantera, Microsoft, and Starbucks, the latter having underwritten no capital in return.
After the money valuation is a firm’s value after outside bankrolling and/or capital injections are further made to its balance sheet. In this example, it also comprises the equity allocated to Starbucks related to their collaboration.
As per a spokesperson for the company, “From a cash-flow perspective, Bakkt will not be earning much based on their proposed contract fees, so they really need a lot of volumes. A lot of things will need to line up for investors to receive returns that they would typically expect for a Series A.”
According to their SEC filing, in case Bakkt is dismissed from giving on its plan to garner institutional acceptance or look out for different cash-flow sources, investors have equity improvement rights offered by ICE.
Page 60 notes, “non-ICE partners in Bakkt hold a put option to need us to repurchase their interests subject to certain terms.” Postponements in implementation might let the investors realize this trigger and exit their put.
Now, a key question is how investors will make their projected returns based on their $740 million post-Series A valuation, given the current regulatory barriers and a five-month delay in launching.
Indeed, Bakkt’s proposed fee of $0.50 per contract is rather small, some equating it to less than 1 basis point. The next cheapest U.S. trading option is currently at 8 basis points.
CFTC Understands Blockchain
With BLOCKTV, Berkovitz comforted the cryptocurrency community that the body is dedicated to releasing the market from deception and influence rather than shelling down new expertise.
He states:
The CFTC is pro-innovation. We do not have an anti-crypto or anti-blockchain attitude. We are not out to get new technology; we are out to get the bad guys.