Cryptocurrency firm Bakkt is shifting its focus back to digital asset custody as its primary business, expanding its support to include six additional coins. In addition to Bitcoin and Ether, Bakkt will now offer custodial support for Bitcoin Cash, Dogecoin, Ethereum Classic, Litecoin, Shiba Inu, and USD Coin. The company plans to add more coins to its custodial services in early 2024.
Custody services involve safeguarding cryptographic keys crucial for accessing and transferring digital assets. Bakkt aims to enhance the security of these assets through various measures, including cold storage and multisignature technology.
This move follows Bakkt’s quarterly earnings report, revealing an adjusted EBITDA loss of $21.6 million, a 30% decrease year-over-year. The company’s crypto revenue for Q3 2023 reached $191.8 million, with a total revenue of $204.8 million. However, assets under custody reported a 28% decrease, standing at $505.7 million.
To bolster its crypto custody division, Bakkt is forging partnerships, planning to offer clearing and custodial services for EDX Markets, a Wall Street-backed crypto exchange. Bakkt’s new clients for custodial services include Bitcoin platform Unchained and LeboBTC, a crypto consulting firm for institutional investors.
Gavin Michael, CEO of Bakkt, emphasized the significance of qualified crypto custody in light of recent events. Strengthening custodial services aligns with Bakkt’s strategy of targeting business-to-business clients. In February, Bakkt announced the sunset of its consumer-facing app to focus on institutional clients during the crypto winter.
The move towards digital asset custody is not unique to Bakkt, with traditional financial institutions like BNY Mellon and DZ Bank also entering the space. BNY Mellon launched a digital custody platform in 2022, safeguarding ETH and BTC holdings for selected clients, while DZ Bank began offering crypto custody to institutional investors earlier this month. As the crypto industry matures, custody services play a crucial role in building trust and security for institutional and retail investors alike.