Donald Trump's head-long charge into the crypto market is gathering pace with the news his media company is set to buy trading platform Bakkt, just weeks before he assumes the presidency.
Trump Media & Technology Group, which owns Truth Social, is in discussions to buy the US firm, the Financial Times reported on Monday.
Its shares increased by as much as 17 per cent on Monday and Bakkt's stock more than tripled in after-hours trading; the latter's rise was so high that trading had to be stopped for volatility.
That has also led to Bakkt's market capitalisation to leap to about $402 million – nearly 160 per cent higher compared to Friday's close. Both companies are said to be in advanced talks and are close to sealing an all-stock acquisition. The value of the deal was not disclosed.
Trump Media, Bakkt and its majority shareholder, financial exchange operator Intercontinental Exchange (ICE), have yet to comment on the report.
The move is also another apparent vote of confidence from Mr Trump, the once crypto sceptic, who, in a spectacular shift, is now openly accepting digital currencies as part of promises made during the campaign trail.
What is Bakkt?
Founded in 2018, Bakkt is a financial services company that “builds crypto technology that enables businesses to grow with the crypto economy”, according to its LinkedIn profile. ICE owns 55 per cent of the company.
Its first chief executive, Kelly Loeffler, is a former Republican senator from Georgia, who is also currently co-chairwoman of the committee in charge of Mr Trump's upcoming inauguration in January.
It was listed on the New York Stock Exchange in October 2021 and was able to raise $50 million in a post-initial public offering equity round, according to data from start-up tracker Crunchbase.
From 2019 to 2022, it made four acquisitions: Rosenthal Collins Group, Digital Asset Custody Company, Bridge2 Solutions and Apex Crypto, which it bought for $200 million.
Did Bakkt foresee the crypto stock price spike?
Sort of. “Since the US presidential election, we’ve seen a dramatic increase in trading volumes driven by favourable macro sentiment and rising crypto prices,” Andy Main, president and chef executive of Bakkt, said while releasing its third-quarter earnings.
“As of November 12th, we had transacted $279 million in volume, already surpassing October’s total of $165 million in just 12 days.”
Bakkt did not directly attribute this boost to Mr Trump's win; instead, the company said these “tailwinds” were aligned with the upcoming roll-out of its BakktX institutional trading platform.
The company “believe[s BakktX] will put us in a strong position to win share in a rapidly growing market”, it added.
Bitcoin, and the crypto industry in general, were in its “normal” trading range in the lead-up to the US elections, but then soared to numerous records once it was clear Mr Trump clinched victory on November 6.
That was just more than a week before Bakkt released its third-quarter financial results on November 14. It is normal for key company reports like these to be updated up to the last second.
In this case, Bakkt's tone in a statement accompanying the results was indicative of the prevailing sentiment after the poll results – which could have been different if Vice President Kamala Harris, who is not as enthusiastic as Mr Trump on cryptocurrencies, won the vote.
Why Trump's change of heart with crypto?
Mr Trump made a spectacular U-turn when it comes to cryptocurrency: in his first term, he derided Bitcoin and its peers as a “not money”, “based on thin air” and something that “can facilitate unlawful behaviour, including drug trade and other illegal activity [sic]", even calling it a “scam” after he left office.
The turning point was when Mr Trump began selling non-fungible tokens of himself as a superhero in December 2022, a month after he declared his intention to run for president again.
He raised $8.9 million in the process, which apparently proved to him that crypto can be beneficial. It may have also helped that the vice president-elect, current Ohio Senator J D Vance, has been known to own Bitcoin since 2021.
Can Trump own a company while he is president?
The short answer is yes. US law dictates that while government officials are barred from owning or running businesses, there are no such rules covering the president and vice president.
However, all US presidents since Lyndon Johnson have either sold their business interests or placed them in a so-called blind trust – which prevents asset owners from having any relationship with trustees – in order to prevent being suspected of profiting from the presidency, or leveraging to office for personal gains.
“If the president of the US used his official power as president to make a decision in order to enhance his own wealth, he would expose himself to severe political criticisms and perhaps even impeachment, if one could argue that it rose to the level of bribery,” Andrew Napolitano, a former jurist, said on the online legal education platform Talks on Law.
“But there is no statute prohibiting it. Now, if he could tolerate the political firestorm, no legal action would ensue.”
Mr Trump, in his first term, turned over his Trump Organisation to his children; it is unclear what move he will make in his next.
Trump's touch rubs off on Tesla again
Bakkt was not the only company that benefitted from the manoeuvring of Mr Trump's team on Monday.
The incoming president's team has broached plans to ask the Department of Transportation to create a framework and prioritise the posting of self-driving vehicles, Bloomberg reported.
If enacted, that would be a huge win for autonomous driving – and Elon Musk, who has championed self-driving vehicles with his Tesla Motors and is arguably Mr Trump's staunchest supporter right now, stands to greatly benefit from it.
This has, again, helped Tesla: shares of the world's biggest electric vehicle maker climbed more than 7 per cent on Monday, extending its gains to about 28 per cent since election day.
That was also bad news for Uber Technologies and Lyft, as their stock prices fell more than 6 per cent, on the spectre that it may compete with Mr Musk's planned Cybercab robotaxis, which he unveiled last month.
