Intercontinental Exchange (ICE.NYSE) plans to buy loyalty, and then sell it to a subsidiary

Last year, Intercontinental Exchange (ICE.NYSE), which operates global exchanges and clearing houses and provides data and listings services, launched the first Bitcoin futures and options programs through their subsidiary Bakkt.

The responses were typical of the crypto-space: some hated it and thought it would destroy cryptocurrency 4EVA, and others thought it was the greatest addition to the space since Satoshi Nakamoto rolled out the white paper. Mostly, though, the actual response was fairly tepid: some people made money and other people didn’t.

Now ICE is buying Bridge2 Solutions, which provides loyalty solutions for merchants and consumers, and then they’re going to sell it to their subsidiary Bakkt, after said subsidiary completes their Series B round of funding later on this quarter.

“With the launch of the Bakkt app, we will, for the first time, offer consumers a robust platform to consolidate and use all of their digital assets, from crypto to loyalty points to in game tokens, in one user-friendly wallet. Combining Bridge2 Solutions’ embedded relationships with banks and merchants and their innovative Loyalty Pay solution will enable us to launch new products that further drive loyalty and empower consumers to trade, transfer and spend digital assets in entirely new ways,” said Mike Blandina, CEO of Bakkt.

Bridge2 Solutions’ present customers include seven of the top 10 top financial institutions, and 4,500 loyalty, incentive and employee perk programs for companies across a wide variety of industries. The company’s loyalty pay solution gives consumers an ability to pay with their reward currencies at both the point of sale in retail stores, and with digital currencies through an app. Joining with Bakkt will give their clients the ability to offer more innovative loyalty programs while helping consumers unlock value in those programs.

What Bakkt gets out of this deal is a team dedicated to developing their consumer application, which will then provide digital asset aggregation, conversion and payments through a single platform for customers around the world.

“Bakkt was created to help bring transparency and trust to the previously unregulated digital asset markets. With the launch of the Bakkt Warehouse and Bakkt futures and options markets, the company has achieved quick success with its custody and trading offering. Bakkt’s second round of funding, and its acquisition of Bridge2 Solutions, will help accelerate the development of Bakkt’s consumer application, which has been a key part of our strategy since we first looked at this market,” said Jeffrey Sprecher, founder, chairman and CEO of ICE.

Digital assets go far beyond cryptocurrencies like Bitcoin and Ethereum, representing $1.2 trillion in value, and including digital rewards, loyalty points, in-game virtual assets, merchant stored value, gift cards and cryptocurrencies. It’s popular with millennial consumers, which is the generation cohort most likely to embrace alternative stores of value. They may monetize loyalty points from a favourite airline or trade skins for a video game, and the Bakkt app will enable consumers to unlock much of that value, letting them trade and spend their assets freely as they would any other currency.

The terms of ICE’s acquisition of Bridge2 Solutions were not disclosed.

—Joseph Morton

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