United States securities and exchange commission logo
July 2, 2021
Scott R. Zemnick
General Counsel
VPC Impact Acquisition Holdings
c/o Victory Park Capital Advisors, LLC
150 North Riverside Plaza, Suite 5200
Chicago, IL 60606
Re: VPC Impact
Acquisition Holdings
Correspondence
dated June 24, 2021
Correspondence
dated June 28, 2021
Registration
Statement on Form S-4
File No. 333-254935
Dear Mr. Zemnick:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Unless we note
otherwise, our references to prior comments are to comments in our June
17, 2021 letter.
Response letter dated June 24, 2021
Projected Financial Information, page 160
1. We note your response
to prior comment no. 2 from our June 17, 2021. We note that you
state "sales of
cryptocurrency relate to transactions executed on Bakkt s consumer app
within Bakkt
Marketplace, which activities are currently immaterial". You further
disclose that "The
revenue activity relates to the launch of Bakkt s consumer app, which
became broadly
available in March 2021". Tell us how much Cryptocurrency
revenue was recognized
in the first quarter and the amount you expect to be recognized in
the second quarter.
Tell us whether this revenue is material to your revenues in these
Scott R. Zemnick
FirstName LastNameScott R. Zemnick
VPC Impact Acquisition Holdings
Comapany
July 2, 2021NameVPC Impact Acquisition Holdings
July 2,2 2021 Page 2
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periods. That is, tell us how you determined that this revenue is
immaterial.
General
2. In response to prior comment 2, you state that the revenue projections
attributable to
Crypto Trades were based, among other things, on estimates of active
and transacting user
base, transaction volume and the price of cryptocurrency. Please
disclose the estimates
for each measure that you relied on and the material assumptions and
limitations
underlying those estimates. In addition, explain in more detail how
revenue activity
relating to the launch of Bakkt s consumer app, which became widely
available in March
2021, was taken into account. We note that the projections were
prepared on January 10,
2021.
Response letter dated June 28, 2021
Bakkt Holdings, LLC, page 1
3. Please reconcile for us your disclosure that your performance
obligation for customer
contracts for custody services is a stand ready obligation that is
recognized quarterly over
the related contract term with your assertion in response 2 that
contract duration is a single
day. Please also revise your revenue recognition description for
custody services to
conform to the representations and acknowledgement included in
response 2 and the
requirements in ASC 606-10-50-1b and ASC 606-10-50-12. For example,
revise the
disclosure to describe:
the duration of the contract (that is, the contractual period) in
which the parties to the
contract have present enforceable rights and obligations. See
e.g., ASC 606-10-25-4.
whether the customer has a present contractual right to choose the
amount of
additional distinct services that it purchases, and if so whether
such options represent
material rights, including the reason why or why not, and how you
account for the
options. See e.g., ASC 606-10-55-42.
the significant payment terms for the contract, which you assert
has a duration of one
day. For example, your disclosure references a fixed monthly fee
invoiced quarterly
while your response references a fixed annual fee. See e.g., ASC
606-10-50-12.
4. We note response 2 is limited to the contracts you enter with
institutional custody
customers, but that your disclosure suggests you provide custody
services to high net
worth individuals, consumers and enterprises. See e.g., the
description of Digital Asset
Marketplace on page 270. Please consider the need to further revise
your revenue
recognition description for custody services to encompass these
customers.
5. Please provide a more fulsome accounting analysis in support of your
conclusion that you
are not the principal in trade and clearing services. Include in your
analysis, but do not
limit it to, the following:
A description of how a cryptocurrency buy or sell order is entered
into and then
fulfilled through your app, including an understanding of how
cryptocurrency and
Scott R. Zemnick
FirstName LastNameScott R. Zemnick
VPC Impact Acquisition Holdings
Comapany
July 2, 2021NameVPC Impact Acquisition Holdings
July 2,3 2021 Page 3
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cash transfer between the involved parties.
The considerations, in addition to a regulatory license, and
analysis included in your
evaluation of ASC 606-10-55-36Ab.
The consideration you gave to each of the indicators in ASC
606-10-55-39, including
the relevant facts and circumstances and how you evaluated them.
The relevant terms and conditions under your contract with IFUS
and ICUS that help
inform your conclusion.
Your evaluation of the terms of service, including, but not
limited to, for example
within the Supplemental Terms Cryptocurrency Purchase and
Sale Terms of
Services:
o Section 6 Role of Bakkt, which states in part, In buying
or selling
Cryptocurrencies, Bakkt will act as your counterparty,
meaning it will act as
seller when you buy Cryptocurrency, and it will act as buyer
when you sell
Cryptocurrency. Bakkt will not be your agent or broker.
o Section 7 Cryptocurrency Holdings, which states in part,
Following your
purchase of Cryptocurrency from Bakkt, all rights in the
Cryptocurrency pass to
you from Bakkt,
o Section 5 Exchange Rates, which states in part, Bakkt
will determine the
exchange rates for Cryptocurrencies in its sole discretion,
In establishing
exchange rates, Bakkt is not required to act in your best
interest, and Bakkt has
no obligation to seek or provide the best available price at
any given time, and
[T]he exchange rates offered to you may also include a
markup, spread or other
fee charged by Bakkt as compensation with respect to the
transaction.
o Section 1 Buying Cryptocurrency You may purchase
cryptocurrency from
Bakkt at the exchange rate provided by Bakkt at the time of
sale. You may not
transfer Cryptocurrencies from any external source into your
Wallet.
o Section 3 Sending Cryptocurrency You may not transfer
Cryptocurrencies to
any external wallets or sources.
6. Please revise your revenue recognition description for trade and
clearing to address the
following:
Clarify who your customers are. To the extent your customers are
related parties,
please also revise your financial statements to comply with Rule
4-08(k) of
Regulation SX.
More clearly articulate the specific nature of your performance
obligation for each
customer. For example, it does not appear that either trade
execution/clearing
novation or risk management of open interest are
described in your filing. Please
ensure the description is sufficiently clear to understand why
they are satisfied
almost simultaneously when the trade is executed (by IFUS) and
cleared (by
ICUS).
Provide the disclosures required by ASC 606-10-50-1b and 50-12.
For example,
clarify the significant payment terms for each performance
obligation, including a
more fulsome description of the nature and terms of rebates
and liquidity
Scott R. Zemnick
FirstName LastNameScott R. Zemnick
VPC Impact Acquisition Holdings
Comapany
July 2, 2021NameVPC Impact Acquisition Holdings
July 2,4 2021 Page 4
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FirstName LastName
payments, whether they are only provided to related parties,
and how the nature and
terms relate to your statement that you measure and resolve
these rebates within the
same reporting period.
Disclose the amount of revenue earned from trading and clearing
as well as the other
revenue streams.
7. Please describe for us, and consider the need for further revised
disclosure related to, the
significant payment terms included in your contracts with your
customers for trade and
clearing and what the transaction price is for each type of contract.
For example, your
revenue recognition description for trade and clearing services refers
to both Note 7 as
well as to applicable commission rates, but it is unclear how or
whether they relate to each
other. Further, it is unclear whether the Note 7 reference to payment
to you of all trading
and clearing revenues of ICUS and IFUS relates to the promised
services you provide and
how the expenses incurred by IFUS and ICUS related to their exchange
and clearing
services, which you record net of revenue, relate to the significant
payment terms of and
transaction price for the promised services you provide. Please
provide us with a
representative example of the flow of the payments upon execution of
the trade and
clearing services. The example should illustrate how your net revenue
amount is
determined while showing the various components or payments that
occur.
8. In your May 25, 2021 response to prior comment no.8 you indicated that
Customers may
withdraw its bitcoin from Bakkt Trust s services through an external
transfer at any time
and for any reason. Please address the following in the context of
the accounting
analysis previously summarized as to whether:
Reconcile for us this statement with Sections 1 and 3 of the
Supplemental Terms
Cryptocurrency Purchase and Sale Terms of Services.
If prohibitions on external transfer exist, clarify for us how
that prohibition when
combined with the other rights retained by the company, such as,
but not limited to,
those in Section 5 of the Supplemental that specify that the
Company is not required
to act in its customers best interest, impacts the accounting
analysis described in your
May 25, 2021 response.
Clarify whether customer cryptocurrencies are held in one or more
omnibus wallets
controlled by the Company and whether such wallets at any time
hold Company
cryptocurrencies.
Clarify the nature of the Company s rights described in Section
7.3 of the general
terms of service, which state in part that Bakkt may add or
remove any Digital Asset
class from the Services at any time and for any reason and will
seek to provide you
with advance notice of the addition or removal of any Digital
Assets, unless such
notice is prohibited by law, governmental authority or other legal
process.
Clarify whether the customers to which the terms of service apply
are parties to the
Digital Asset Warehouse Agreement described in your prior
response.
9. We note your disclosure that Bakkt offers a monthly bitcoin futures
contract (your page
273). Bakkt also offers bitcoin options based on this futures contract
and a cash- settled
Scott R. Zemnick
VPC Impact Acquisition Holdings
July 2, 2021
Page 5
Bitcoin futures contract traded on ICE Singapore. Please describe the
company's role in
issuing the monthly bitcoin futures contract. Provide your analysis of
how you account
for these transaction and indicate whether you are the principal. Cite
the accounting
literature that supports your accounting.
You may contact Amanda Kim, Senior Staff Accountant, at (202) 551-3241
or Stephen
Krikorian, Accounting Branch Chief, at (202) 551-3488 if you have questions
regarding
comments on the financial statements and related matters. Please contact
Matthew Crispino,
Staff Attorney, at (202) 551-3456 or Jan Woo, Legal Branch Chief, at (202)
551-3453 with any
other questions.
Sincerely,
FirstName LastNameScott R. Zemnick
Division of
Corporation Finance
Comapany NameVPC Impact Acquisition Holdings
Office of Technology
July 2, 2021 Page 5
cc: Era Anagnosti
FirstName LastName