Crypto firm Bakkt appears to be returning to digital asset custody as its primary business, adding support for six new coins, according to an announcement on Nov. 15.
Aside from Bitcoin (BTC) and Ethereum (ETH), Bakkt will expand its custodial support to include Bitcoin Cash (BCH), Dogecoin (DOGE), Ethereum Classic (ETC), Litecoin (LTC), Shiba Inu (SHIB), and USD Coin (USDC). The company expects to add more coins to its custodial services early next year.
The custody of digital assets focuses on the safeguarding of cryptographic keys, which are crucial for accessing and transferring assets. Various security measures are employed by custodians, such as Bakkt, to protect assets, including cold storage of coins and multi-signature technology that demands multiple approvals for access.
The announcement follows Bakkt’s release of its quarterly earnings report on Nov. 14, when the company disclosed an adjusted EBITDA loss (non-GAAP) of $21.6 million, a 30% decrease year-over-year due to a reduction in compensation and benefits.
According to the report, Bakkt has seen its crypto revenue reach $191.8 million in the third quarter of 2023 thanks to the acquisition of Apex Crypto in April. Over the quarter, the company generated a total of $204.8 million in total revenue. In terms of assets under custody, Bakkt reported $505.7 million, a decrease of 28% over last year.
Bakkt’s 3Q23 earnings report. Source: Seeking Alpha
To strengthen its crypto custody arm, Bakkt is also developing partnerships. According to the company’s quarterly report, it plans to offer clearing and custodial services for the Wall Street-backed crypto exchange EDX Markets, initially serving as a back-up qualified custodian. Among Bakkt’s new clients on custodial services are Bitcoin platform Unchained and LeboBTC, a crypto consulting firm for institutional investors.
“The events of the past year have revealed why qualified crypto custody is so necessary,” said in a statement Gavin Michael, CEO of Bakkt.
Expanding custody services is also an important aspect of Bakkt’s strategy for targeting business-to-business (B2B) clients. In February, the company announced that it would sunset its consumer-facing app launched in 2021 in order to focus on institutions amid the crypto winter.
The custody of digital assets is also being targeted by many traditional financial institutions. Last year, BNY Mellon, the oldest bank in the United States, launched a digital custody platform to safeguard ETH and BTC holdings for selected clients. DZ Bank, Germany’s third-largest bank, has alsobegun offering crypto custody to institutional investors earlier this month.
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