Bakkt Expands Digital Asset Custody Amidst Q3 Losses

A release on Nov. 15 suggests Bakkt is returning to digital asset custody as its main business, adding support for six additional coins.

Bakkt will support Bitcoin Cash, Dogecoin, Ethereum Classic, Litecoin, Shiba Inu, and USD Coin in addition to Bitcoin and Ethereum. The company plans to add coins to its custody services in early 2024.

Cryptographic keys are needed to access and transfer digital assets; therefore, custody involves protecting them. Custodians like Bakkt use multi-signature technology and cold storage to preserve assets.

The statement follows Bakkt’s quarterly financial report on Nov. 14, which showed an adjusted EBITDA loss (non-GAAP) of $21.6 million, down 30% year-over-year owing to pay and benefit cuts.

Bakkt’s Q3 2023 earnings report. Source: Seeking Alpha

After acquiring Apex Crypto in April, Bakkt’s crypto revenue reached $191.8 million in the third quarter of 2023, the article said. The corporation earned $204.8 million in the quarter. Bakkt reported $505.7 million in assets under custody, down 28% from last year.

Bakkt is also forming agreements to enhance its crypto custody arm. The company wants to clear and custodial for Wall Street-backed crypto exchange EDX Markets as a backup certified custodian, according to its quarterly report.

Bitcoin platform Unchained and institutional investor crypto consultancy business LeboBTC are Bakkt’s new custodial clients.

“The events of the past year have revealed why qualified crypto custody is so necessary,” Bakkt CEO Gavin Michael stated. Bakkt’s business-to-business strategy includes expanding custody services.

In February, the business stated it would shut down its 2021 consumer app to focus on institutions during the crypto winter.

Many traditional banks are eyeing digital asset custody. BNY Mellon, the oldest US bank, created a digital custody platform in 2022 to protect chosen clients’ ETH and BTC deposits.

Early this month, Germany’s third-largest bank, DZ Bank, began giving institutional investors crypto custody.