Bakkt launches digital assets custody service

Bakkt launches its enterprise-grade custody service. Announcing the development in a blog post, the firm said that now clients can use the Bakkt warehouse to safeguard their Bitcoin assets. Previously, the Bakkt provided custody only to clients trading the Bakkt Bitcoin Futures contracts.

Among the first to choose the Bakkt Warehouse are Pantera Capital, Galaxy Digital, and Tagomi. In the coming weeks, Bakkt will be onboarding additional firms to their custody offering.

Need for enterprise-grade custody:

Lack of enterprise-grade custody offering has been one of the reasons for lack of interest from institutional investors. They seek for a reputed enterprise which can be trusted for safekeeping their assets.

Bakkt, a cryptocurrency venture by Intercontinental Exchange fills this need by using enterprise-grade security and governance modules, better operational controls and insurance coverage of $125 Million for its wallets. Now with the New York Department of Financial Services (NYDFS) authorization, Bakkt offers its custody service to all institutional clients around the world.

Rising competition in Custody:

Bakkt may face rising competition from Coinbase who recently in Aug 2019 expanded its custody offering by acquiring Xapo, a long-time trusted pioneer in the storage of crypto assets. With the acquisition, Coinbase Custody has grown to over $7 billion in assets under custody, serving more than 120 clients in 14 different countries, making it the largest institutional custodian in the world.

Additionally, Bakkt may face competition from Fidelity Investments, one of the largest asset managers in the world. Fidelity in Oct 2019 launched its own cryptocurrency enterprise-grade custody service to hedge funds, family offices, and financial advisors.

Bakkt crypto adoption plans:

Bakkt’s mission is to expand digital assets access to the global economy by building trust in and unlocking the value of digital assets.

Bakkt recently announced its plans to launch a consumer application and merchant portal in the first half of 2020. Currently piloted by Starbucks, the application allows consumers to pay in Bitcoin and Merchants to instantly convert to fiat currency.

Additionally, the firm is also looking to launch the first Bitcoin futures option in Dec 2019. This gives the buyer of futures option contract the right to buy or sell a particular futures position at a specified price any time before the option expires.