The cryptocurrency firm Bakkt is looking to shift its focus back to digital asset custody after an announcement made by the firm on November 15. Bakkt is now offering custodial services for Bitcoin Cash, Ethereum Classic, Dogecoin, Shiba Inu, and USD Coin. Before entering these coins into their custodial service portfolio, in addition to Bitcoin and Ethereum. The company has also announced that it will include more cryptocurrencies in its custodial services in early 2024.
Crypto custody services involve providing third-party solutions to customers in the form of storage and security services for cryptocurrencies. These services are mainly targeted towards institutional investors who hold a large number of cryptocurrencies that typically include bitcoin and altcoins, but other cryptocurrencies are also included as well. The method they employ in securing customer’s crypto funds consists of a combination of securing funds in hot and cold storage.
The announcement was made after Bakkt released its quarterly earnings report on November 14, where they disclosed a 30% year-over-year decrease in the adjusted EBITDA loss, which amounts to $21.6 Million. The reason identified for this loss was the reduction in compensation and benefits.
Despite this, Bakkt reported $191.8 million in crypto revenue for Q3 2023. The total income of the company over the quarter has been reported to be $204.8 Million. The revenue was credited to the acquisition of Apex Crypto back in April.
Apex Crypto is a platform that offers trading solutions for digital assets, which also includes services in the form of assisting in purchasing, selling, and storage of crypto assets. Apex Crypto also provided support for transferring various cryptocurrencies like Bitcoin, Ethereum, Litecoin, etc.
Despite showing a healthy revenue stream, assets under custody of Bakkt decreased by 28% to $505.7 million compared to the previous year.
Bakkt is also planning to form partnerships and plans where they will enhance their crypto custody services plan to the crypto exchange, EDX Markets. EDX Markets is an institutional cryptocurrency exchange backed by Citadel Securities, Fidelity Digital Assets, Charles Schwab Corporation, Virtu Financial, and Sequoia, among others. Some other new clients Bakkt has added to its business portfolio include Bitcoin platform Unchained and LeboBTC, a crypto consulting firm for institutional investors.
Bakkt CEO Gavin Michael emphasized the importance of having professional crypto custody services in light of recent events. The company’s new strategy is targeted more towards business-to-business clients. This strategy was made more evident when the company decided to discontinue its consumer-facing app back in February of 2023. The trend of traditional financial institutions entering the digital asset custody space is evident, with BNY Mellon launching a digital custody platform in 2022 and Germany’s DZ Bank offering crypto custody to institutional investors earlier this month.
