Intercontinental Exchange (ICE) owns and operates some of the largest exchanges around the globe, including the New York Stock Exchange. Now, its bitcoin arm Bakkt has opened the doors of its custody services to all the institutions of the world.
In operating as a limited liability trust company in New York, Bakkt announced the pivot on November 11th upon the startup having received approval from the New York Department of Financial Services (NYDFS) to “offer bitcoin custody to all institutions.”
Bakkt, known for having launched the first physically-settled bitcoin futures contracts, had hitherto used its Bakkt Warehouse facility to custody the bitcoin used in its futures transactions. With the NYDFS’s approval, the facility can now directly secure enterprises’ bitcoin holdings even if futures aren’t involved.
And while saturation is already accruing near the top of the cryptocurrency custody sector, Bakkt is hoping to beat out the competition by offering its clients a superior service. As the company’s chief operating officer Adam White explained on Monday:
“While technology provides the foundation by which we securely store customer funds, the Bakkt Warehouse employs extensive physical, operational and cybersecurity safeguards too. Our relationship with Intercontinental Exchange (NYSE: ICE), a Fortune 500 company that owns and operates the market infrastructure upon which the world’s largest financial institutions already rely, enables us to uniquely address client needs in the digital asset custody space […].”
Per Bakkt, the first oncomers to use its widened custody offering will be cryptoeconomy mainstays Galaxy Digital, Pantera Capital, and Tagomi.
Bakkt’s Futures Volume Ascending
Fledgling though it may be, Bakkt saw some celebration last week after the firm set a new all-time high for intraday trades of its monthly bitcoin futures product.
Indeed, on November 8th more than $15.33 million USD worth of Bakkt’s physically-settled monthly bitcoin futures were traded, up over $5 million from the company’s previous record of $10.25 million that was set in October. Since launching back in September, the exchange has facilitated more than 12,000 bitcoin worth of trades involving its monthly futures contract.
Of course, Bakkt still has plenty of room to go before the volume around its bitcoin futures catch up with similar products from CME Group, which as of this year sees hundreds of millions of dollars worth of its bitcoin futures traded every day.
Yet CME Group’s bitcoin futures are cash settled rather than physically settled, so Bakkt will undoubtedly continue to hone in on differentiating its offerings and infrastructure as it makes its case for increased market share.
It’s Not All About Institutions
Bakkt is also focusing on efforts to cater to merchants and consumers.
Last month, Bakkt revealed the coming launch of a consumer app, which will be aimed at helping users pay for goods and services from merchants using cryptocurrencies, among other things.
“Our vision is to provide a consumer platform for managing a digital asset portfolio, whether they wish to store, transact, trade or transfer their assets,” Bakkt chief product officer Mike Blandina said at the time.
On the flip side, the ICE-backed company is also developing a merchant portal, of which popular coffee chain Starbucks will be a launch partner.
Options Are Coming, Too
Bakkt also revealed in October that it was launching the “the first regulated options contract for bitcoin futures” on December 9th.
Options offer a buyer the right to buy an asset, in this case bitcoin, at a specific price or time.
“The Bakkt Bitcoin Options contract will be based on the benchmark Bakkt Monthly Bitcoin Futures contract and represents another important step in developing this asset class for institutional investors, their customers and investors,” company CEO Kelly Loeffler said.
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