In a significant move for the cryptocurrency sector, Bakkt, a crypto custody and trading platform, announced on February 14 that it has received regulatory clearance to initiate a “shelf registration,” potentially raising up to $150 million through the sale of its securities. This announcement comes at a critical time for Bakkt, which just a week prior expressed concerns over its financial stability, highlighting challenges in its balance sheet.
A shelf registration, or shelf offering, is a regulatory process that allows a company to register a new issuance of securities with the Securities and Exchange Commission (SEC), which can then be sold in one or more offerings over a three-year period. This eliminates the need for separate approvals with each offering, providing companies like Bakkt with a streamlined way to raise capital over time.
The approval is a pivotal development for Bakkt, especially considering the firm’s recent admission of cash shortages, raising doubts about its ability to continue operations. The company, once heralded as a potential ‘savior’ for Bitcoin during the 2018 bear market, has faced a challenging financial trajectory, with eight consecutive quarters of net losses since its public listing in October 2021.
Despite a rebound in the crypto market in 2023, Bakkt’s financial struggles persisted, with reported losses of $44.9 million, $50.5 million, and $51.7 million through the first three quarters of the year. The cumulative net losses since Q4 2021 have amounted to a staggering $2.26 billion, although the losses narrowed in 2023 compared to the significant setbacks in 2022.
Bakkt’s platform, which offers digital asset trading services primarily to institutional clients, has established strategic partnerships with notable companies such as Starbucks and Amazon Web Services to facilitate digital asset transactions. Founded in 2018 by the Intercontinental Exchange, the owner of the New York Stock Exchange, Bakkt aimed to bridge the gap between traditional finance and the burgeoning world of cryptocurrencies.
Following the announcement of the regulatory approval, Bakkt’s stock (BKKT) saw a 7.8% increase to $1.03, according to Google Finance. Despite this uptick, the stock has experienced a significant decline, dropping over 51% in 2024. This downturn is a sharp contrast from its peak at $42 on October 29, 2021, illustrating the volatility and challenges faced by companies in the crypto sector.
