Bakkt's stock price soared over 162% on Monday, after Financial Times reported that Donald Trump's company is in advanced negotiations to acquire this cryptocurrency exchange.
Bakkt Holdings Inc (BKKT) closed up 162.46% at $29.71 on October 18 and continued to rise 16.43% to $34.59 after hours. Trump Media and Technology Group Corp (DJT) — the entity owning the social media platform Truth Social — also ended the day with a 16.65% increase but later lost about 3.5% after hours, according to Google Finance.
According to Financial Times, earlier on October 18, citing two people familiar with the negotiations, Trump Media — where the U.S. president-elect holds a 53% stake – is in advanced negotiations to acquire all shares of Bakkt, owned by Intercontinental Exchange.
BKKT surged on Monday, but is still down about 44% this year and 97% below the peak of $1,063 from October 2021. Source: Google Finance
The cryptocurrency market has exploded since Trump won the election earlier this month, with Bitcoin (BTC) rising about 30%. Trump's campaign promises to end legal hostility toward the cryptocurrency industry and promises a strategic Bitcoin reserve, along with many other promises beneficial to cryptocurrency.
If successful, this deal would mark Trump's next step into the cryptocurrency field. The president-elect has licensed his image for several non-fungible token (NFT) collections and supports his family's cryptocurrency project, World Liberty Financial, where he and his family are expected to receive a 75% cut of the fees.
A spokesperson for Intercontinental Exchange said they had no comment when asked about the reported deal. Trump Media and Bakkt did not immediately respond to a request for comment.
The value of the deal is unknown, but Bakkt is currently valued at over $400 million after its stock surged despite the exchange struggling to turn a profit. Its cryptocurrency custody business has also never taken off, which according to FT reports will not be included in the deal with Trump Media.
Bakkt: Trump's vehicle for a strategic Bitcoin reserve?
Trump is expected to face numerous obstacles in establishing a Bitcoin reserve, which will require Congressional approval. Not every lawmaker on Capitol Hill wants the government to hold a speculative asset that has historically been highly volatile.
"Establishing a Bitcoin reserve will be very challenging without Congressional approval, and the easiest way to address this issue may be through an SPV," wrote Izabella Kaminska, founder of the financial news site The Blind Spot, on X.
A special purpose vehicle (SPV), or special purpose entity (SPE), is a company created to isolate risk from its parent company and carry out limited activities, which in this case is to buy Bitcoin.
Kaminska speculated that Trump could use Trump Media "as a mechanism" to create a strategic Bitcoin reserve without Congressional approval.
She explained, theoretically, that Trump could direct Trump Media to use Bakkt as an SPV to buy Bitcoin and establish a profit transfer agreement to donate the company's capital gains to the U.S. government.
"If people still think this is crazy, I don't think they fully appreciate the level of privatization happening in the Trump administration," Kaminska said.
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