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Bakkt buys crypto asset custody company

Bakkt has acquired crypto custodian, Digital Asset Custody Company, and partnered with custodial bank, BNY Mellon. These developments are part of its strategy to provide a fully regulated, end-to-end crypto asset custody and trading ecosystem for institutional investors.

Bakkt, the highly anticipated bitcoin futures exchange and custody provider, is owned by Intercontinental Exchange, owners of the New York Stock Exchange. Bakkt will offer a range of crypto asset services to institutional investors, a development that is being closely watched by the crypto industry as an indication that the space is maturing.

Bakkt Bolsters its custodial offering

A key part of the Bakkt offering is a state of the art, enterprise grade custody solution that meets the needs of institutional investors holding large amounts of crypto assets. This week Bakkt announced that it has acquired crypto asset custodian solutions provider, Digital Asset Custody Company, and entered into a partnership with Bank of New York Mellon to offer geographically-distributed storage of private keys.

Founded in 2017, the New Jersey based Digital Asset Custody Company provides an institutional grade custodian service, including multi-blockchain support, professional financial reporting, and digital asset insurance.

Speaking about the acquisition, Bakkt COO Adam White said, “DACC shares our security-first mindset and brings extensive experience offering secure, scalable custody solutions to institutional clients. As we look to scale and support custody of additional digital assets, DACC’s native support of 13 blockchains and 100+ assets will serve as an important accelerator.”

Bakkt’s partnership with leading custodian bank, BNY Mellon, will leverage the bank’s expertise in safeguarding securities and assets. Bakkt will work with BNY Mellon to provide the distribution of cryptographic private keys across geographical locations to meet the enterprise grade security requirements of Bakkt’s custodial clients.

The New York-based crypto venture has filed with the New York Department of Financial Services to become a trust so that it can serve its customers as a Qualified Custodian for crypto assets.

Is Bakkt the “Acid Test” for crypto on Wall Street?

Since the announcement of its launch, Bakkt has received substantial media coverage due to its high profile backers ICE, Starbucks and Microsoft, and because it is poised to become the first fully fledged institutional on-ramp for regulated bitcoin investments.

For its initial product roll-out, Bakkt plans to launch physically delivered bitcoin futures that will be traded on ICE Futures US (IFUS), and cleared on ICE Clear US (ICUS). The physically settled bitcoin (BTC) will be held by Bakkt.

When Bakkt launches, the demand for its product is increasingly seen as the “acid test” for crypto on Wall Street. Significant demand for Bakkt’s bitcoin futures would be a clear sign that Wall Street is finally ready for crypto. Conversely, if Bakkt futures share the same fate as CBOE Bitcoin futures, which the Chicago-based derivatives exchange suspended after a lack of investor uptake, this would indicate the institutional investor community is not yet comfortable with directing a substantial funds towards digital assets such as bitcoin.


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