Bakkt's debut last September was one of the most eagerly awaited launches in crypto because it promised something groundbreaking and potentially momentous for the industry: institutional access to actual bitcoin. 

The crypto-first subsidiary of the New York Stock Exchange wouldn’t exactly buy or sell bitcoin for you, but its ambitious goal of offering the first physically settled futures contracts in the U.S. using a daily expiration structure almost promised to do just that. More important, this financialization of bitcoin could open the market to more types of traders (and speculators), offering skeptical firms that might not be able to trade bitcoin directly or the cash-settled futures offered by CME a new way of getting into the space.

Not content with serving institutional clients bitcoin options and futures contracts, the Atlanta-based Bakkt is now planning a push into the retail market as the second phase of its rollout. And while it may not have the largest trading volume, its connections to the traditional financial markets as an Intercontinental Exchange (ICE) subsidiary give it a unique position among its competitors. 

Bakkt was unveiled in August 2018 as a venture aimed at offering dally physically settled bitcoin futures contracts. Its plans changed over the next year – it now offers daily and monthly physically settled contracts, monthly cash-settled contracts and options – but the company went live with its first products in September 2019.

These products were available to ICE’s clearinghouse members, which include a number of traditional financial firms and Wall Street mainstays. Bakkt opened the door to these firms being able to purchase bitcoin, after a fashion.

“When you think about transacting on the futures exchange you’re operating within a [federally] regulated exchange,” then-CEO Kelly Loeffler (now a U.S. Senator for the state of Georgia) said at the time.

Bakkt’s original vision also created some unique regulatory challenges. It planned to custody the bitcoin it offered through its contracts, which is not typical for commodity futures providers, former Commodity Futures Trading Commission J. Christopher Giancarlo hinted some eight months after Bakkt was first announced.

U.S. law stated that entities offering physically settled futures contracts had to custody the physical commodities at a state-regulated bank or trust, which Bakkt was not (at the time). Bakkt revised its plans and applied for a trust license under the New York State Department of Financial Services, which was granted in August. 

“The … thing that’s important about a monthly contract is what it offers is the ability to take [snapshots] at different times throughout the next year so it adds spread trading … and timing of, for example the halvening coming up next year, the contract, you’ll be able to look out into that time period in 2020,” Loeffler told CoinDesk in August.

Now, just over seven months after launching its first physical contracts, Bakkt is focusing on streamlining rewards points and payments through digital currencies. The company announced in October it was creating a mobile application it hoped would let consumers transact using bitcoin and other tools or currencies. 

The app itself isn’t live yet, but Bakkt has already begun testing mobile payments with Starbucks, one of its original launch partners, which now offers some users the chance to pay for their coffees using “Bakkt Cash” through the Seattle firm’s mobile app.

This phase of the project appears to harken back to Bakkt’s earliest days. In August 2018 the company announced it would be working with Starbucks to create “practical” applications for consumers.

The vision has evolved into an ambitious plan to unite loyalty programs such as airline miles and hotel points with gaming tokens and cryptocurrencies, creating a single payments tool. Jeffrey Sprecher, CEO of Intercontinental Exchange, said during an earnings call earlier this year that Bakkt could one day become a marketplace for these types of rewards points.

“We will be looking at consumer adoption more than revenue or expense,” he said.