Bakkt, a cryptocurrency company, is redirecting its attention to digital asset custody as its primary focus, revealing plans to support six new tokens in an announcement made on November 15. Alongside Bitcoin and Ethereum, Bakkt is broadening its custody support to encompass Bitcoin Cash, Dogecoin, Ethereum Classic, Litecoin, Shiba Inu, and USDC, intending to include additional tokens in its custody service by early 2024.
The core focus of asset custody in the digital realm revolves around safeguarding keys essential for accessing and transferring assets. Custodians such as Bakkt employ diverse security measures like cold storage for cryptocurrencies and multi-signature technology, which mandates multiple approvals for asset access.
The recent announcement comes on the heels of Bakkt's quarterly earnings report released on November 14, which revealed an adjusted EBITDA loss (non-GAAP) of $21.6 million, marking a 30% year-over-year decline owing to reduced compensation and benefits. Notably, Bakkt reported cryptocurrency revenue of $191.8 million in the third quarter of 2023, attributed to the acquisition of Apex Crypto in April. The company's total revenue for the quarter reached $204.8 million, while its assets under custody amounted to $505.7 million, marking a 28% decrease from the previous year.
To fortify its cryptocurrency custody wing, Bakkt is forging partnerships, aiming to extend clearing and custody services to Wall Street-backed cryptocurrency exchange EDX Markets as a backup qualified custodian, as per its quarterly report. Among the new clients for Bakkt's custody services are Bitcoin platform Unchained and crypto advisory firm LeboBTC, catering specifically to institutional investors.
Bakkt CEO Gavin Michael highlighted the critical need for qualified cryptocurrency custody, emphasizing the importance of the past year's events. Expanding hosting services stands as a crucial element of Bakkt's strategy to engage business-to-business (B2B) customers, a plan announced earlier in February when the company decided to forego its consumer-oriented app for the year, redirecting focus toward institutional clientele amid the crypto market downturn.
Amidst Bakkt’s focus on digital asset custody, other traditional financial institutions like BNY Mellon and DZ Bank have also delved into providing cryptocurrency custody services to safeguard assets held by select clients, reflecting a growing trend in the industry.
