Public Keys is a weekly roundup from Decrypt that tracks the key publicly traded crypto companies. This week: After predicting it wouldn’t survive this long, Bakkt Holdings has undergone another transformation; the largest securities clearinghouse in the world doubles down on Ethereum; and Robinhood launches a prediction market for your March Madness bracket.
Setbacks for Bakkt Holdings
There’s new business afoot for crypto trading and payment solutions company Bakkt, which trades on the New York Stock Exchange under the BKKT symbol. But there’s also a bit of blood in the water.
The company just hired a new co-CEO: Akshay Naheta, who oversaw SoftBank’s investments in chip manufacturer ARM and GPU giant Nvidia. Bakkt also inked a deal with Distributed Technologies Research, which Naheta founded, to integrate its stablecoin-based payments tech into its crypto trading platform.
It’s unclear which other companies were already using DRT’s stablecoin payments tech.
“Once this partnership takes effect, Bakkt believes it will be positioned to unlock new revenue streams in crypto trading and stablecoin payments, while adding efficiency to the vast and rapidly growing cross-border payments market,” the company said in its press release.
But the company began the week in the uncomfortable position of having to announce that two of its largest clients—Bank of America and Webull—are not renewing their commercial agreements. The most damning line in the company’s SEC filing: Webull represented 74% of its crypto services revenue.
This isn’t the first time things have looked bleak for Bakkt. Around this time last year, the company had just announced a big international expansion. Then, weeks later, told the SEC it wasn’t sure it would survive another 12 months.
If it seems like Bakkt is pivoting at a dizzying rate, remember that it has strong ties to Wall Street and has been given a lot of space to figure out what kind of company it wants to be.
Case in point: Bakkt was launched in 2018 by Intercontinental Exchange, which also goes by ICE, the parent company of the New York Stock Exchange. The initial vision was for Bakkt to act as a regulated Bitcoin futures and custody platform.
But just this week, the company revealed in its delayed earnings report that it sold its custody division for $1.5 million to none other than its parent company, Intercontinental Exchange.
“The divestiture is expected to streamline operations by reducing operating expenses by $3.8 million annually and freeing up approximately $3.0 million of capital held for regulatory reserves,” the company wrote in its earnings report.
Must be ICE having such a supportive parent company.
Tokenization Tea Leaves
Tokenization and RWA nerds: Take heed. Just as the RWA, or real-world assets segment, surpasses $19 billion, the market infrastructure companies are picking favorites.
The Depository Trust & Clearing Corporation, or DTCC, has joined the ERC3643 Association, the company said on Thursday.
For those not already in the know: DTCC is the world’s largest central securities depository. It handles the bulk of clearing, settlement, and trade reporting for U.S. markets. The company, which is owned by its bank and institution customers, processed securities transactions valued at $3 quadrillion in 2023.
In conjunction with its announcement, DTCC has added support for ERC-3643 tokens to its tokenized securities platform, ComposerX.
What this boils down to is the biggest securities settlement corporation in the world doubling down on Ethereum. And where it goes, others will follow. The Japan Securities Clearing Corporation has been collaborating with DTCC to test out settlements on Ethereum since last year.
But that doesn’t mean the securities clearinghouses of the world have reached consensus.
As Ledger Insights explains, Euroclear has built its tokenization platform on the Corda blockchain—although it’s not exclusively tied to it. And Hong Kong’s central securities depository has been partial to the Canton Network.
Robinhood Sets Sites on Prediction Markets
Popular trading app Robinhood has made a big push into prediction markets with a new feature that lets users gamble—er, speculate—on sports.
After making its big announcement with March Madness markets, the company added a new one that invites users to wager on whether Fed fund rates will be above 4% or 4.25% after the next Federal Open Markets Committee meeting.
The company tried out its first prediction market in October last year with a U.S. presidential election prediction market. It was open only to American users. At the time, that seemed like a shot across the bow of would-be competitor Polymarket, which has never been open to U.S. bettors and had to assure regulators that it was making an effort to stop would-be rule breakers using VPNs to use the platform.
But now, Robinhood has partnered with Kalshi. In October, Kalshi won its yearslong legal battle against the Commodities Futures Trading Commission (CFTC).
Analysts have estimated that Robinhood’s foray into prediction markets could create a $260 million stream for the company, which trades on the Nasdaq under the HOOD ticker.
Earlier this week, Robinhood got a “Buy” rating from research firm Compass Point as it initiated coverage of the company.
Happy Fri-M&A
Coinbase is in advanced talks to buy crypto derivatives exchange Derebit, unnamed sources told Bloomberg. The news broke late enough that it almost didn’t make it into this edition of Public Keys.
Derebit, founded in 2016, is the world’s largest platform for Bitcoin and Ethereum options. As of this writing, it has seen $3 billion worth of volume in the past day and boasts that it has 85% of the BTC and ETH derivatives market cornered.
Coinbase already offers derivatives trading, but not in the United Kingdom or Spain—two regions where Derebit is available. Conversely, Derebit is not available in the U.S., where Coinbase serves the bulk of its customers.
The anonymous sources told Bloomberg that the companies have already given regulators in Dubai a heads up about the impending deal, since Derebit has a license there that would be transferred to Coinbase if the deal goes through.
Earlier this year, the news outlet reported that Coinbase competitor Kraken was eyeing it for an acquisition. At the time, unnamed sources familiar with those talks estimated that the derivatives exchange was worth between $4-5 billion.
Coinbase, which trades on the Nasdaq under the COIN ticker, picked up a little upward momentum ahead of the closing bell. But at the time of writing, was changing hands for $188.69 and trailing its opening price by 0.85%.
Other Keys
Strategy started the week like a lamb and ended it by saying MOAR. The software company, which trades on Nasdaq under the MSTR ticker, made its smallest Bitcoin buy yet by adding 130 Bitcoin valued at $10.7 million to its corporate reserve on Monday. The next day, it unveiled a $500 million offering of its Strife (STRF) perpetual preferred stock to fund more BTC acquisition. Then, by Friday, it had upsized that offering to $723 million.
Bitcoin mining stocks had another rough week, despite getting good news from none other than the U.S. Securities and Exchange Commission. Yesterday, the securities regulator clarified that Bitcoin mining operations “do not involve the offer and sale of securities.” Phew, right? More like meh. Top publicly traded miners MARA, CleanSpark, and Bitdeer had all lost a few percentage points by Friday afternoon.
But it’s not all bad news for miners: Bitfarms completed its acquisition of Stronghold in a deal valued at $175 million.
Don’t feel too bad for Kraken missing out on a Derebit acquisition. On Thursday, the exchange announced that it has acquired futures broker NinjaTrader in a deal valued at $1.5 billion. The exchange confirmed to Decrypt earlier this month that it’s planning to go public, but declined to share a timeline.
And, finally, how’s Dubai sound for spring break? The Dubai Financial Services Authority put out the call for “expressions of interest” from companies wanting to experiment with “tokenization services” in its regulatory sandbox. But they need to move fast, the deadline is April 24, 2025.
