Bakkt Acquires Custody Service Bringing it Closer to Launch
Bakkt, the keenly-anticipated physical bitcoin futures product, has acquired Digital Asset Custody Company (DACC), as well as establishing a partnership with custodial bank BNY Mellon.
The two strategic moves bring Bakkt another step closer to launching its fully regulated bitcoin futures, which will include full crypto asset custody for institutional investors.
Bakkt was originally set to launch in January, but has been plagued by regulatory delays. While the precise details of these are unknown, it appears that the issue of custody has raised significant questions from regulators. In short, the bitcoins purchased by investors and ultimately delivered to them will need to be held somewhere within the Bakkt ecosystem (not by the investors themselves, who cannot be expected to set up wallets securely). This is no mean feat. In a recent blog post entitled Custody at our Core, Bakkt’s COO Adam White (formerly a Coinbase exec), writes:
‘Having worked in the crypto space developing advanced trading and custody solutions since 2013, it’s clear to me that ironclad infrastructure and a security-first mindset are fundamental to storing digital assets. It’s also critical to assemble the right team, with engineers that deeply understand cryptography, distributed systems and other aspects unique to the space.’
The blog discusses the acquisition of DACC, which supports 13 blockchains and over 100 digital assets. The same post goes into some detail about the protocols and infrastructure of Bakkt’s wallets and security set-up.
These developments will undoubtedly prove valuable and will go some way to reassuring the concerns of the US Commodities Futures Trading Commission (CFTC), the regulatory body that oversees Bakkt. It seems Bakkt are anticipating a flow of Wall Street money into the space during the next market cycle for bitcoin. Whether it will be enough remains to be seen.