Cryptocurrency firm Bakkt is making a strategic shift towards bolstering its digital asset custody services, following a 28% decline in assets under custody, as revealed in its recent quarterly earnings report. The company’s move includes the addition of support for six new cryptocurrencies, expanding beyond Bitcoin and Ether.
In an announcement on November 15, Bakkt disclosed plans to extend its custodial support to include Bitcoin Cash, Dogecoin, Ethereum Classic, Litecoin, Shiba Inu, and USD Coin. The company aims to further broaden its coin offerings in early 2024.
Custody of digital assets involves securing cryptographic keys crucial for asset access and transfer. Bakkt, like other custodians, employs various security measures such as cold storage and multisignature technology.
This strategic shift aligns with Bakkt’s focus on catering to business-to-business clients. The move comes in the wake of Bakkt’s Q3 earnings report, which revealed a 30% year-over-year decrease in adjusted EBITDA loss to $21.6 million, attributed to a reduction in compensation and benefits.
Despite the earnings dip, Bakkt reported significant crypto revenue of $191.8 million in Q3, propelled by the acquisition of Apex Crypto in April. The total revenue generated by the company in the quarter amounted to $204.8 million. However, assets under custody saw a decline to $505.7 million.
To fortify its crypto custody division, Bakkt is actively forming partnerships. Notably, the company plans to offer clearing and custodial services to EDX Markets, a Wall Street-backed crypto exchange. Bakkt’s new clients in the custodial services space include Unchained, a Bitcoin platform, and LeboBTC, a crypto consulting firm for institutional investors.
Gavin Michael, CEO of Bakkt, emphasized the crucial role of qualified crypto custody in the wake of recent events. The company’s strategy to expand custody services aligns with the broader trend, as traditional financial institutions, such as BNY Mellon and DZ Bank, also venture into digital asset custody to meet growing institutional demand.