Pending bitcoin futures exchange Bakkt has acquired the Digital Asset Custody Company (DACC), secured insurance for assets it will hold in cold storage and revealed a partnership with BNY Mellon.
Adam White, the former Coinbase executive turned Bakkt COO, wrote in a blog post Monday that it acquired DACC to continue developing a secure digital asset storage solution. DACC's team "share [Bakkt's] security-first mindset," he wrote, while also bringing experience in building its own secure and scalable custody solutions.
White hinted that the acquisition may also help Bakkt add cryptocurrencies beyond bitcoin sometime after launch, writing:
Bakkt did not reveal how much it spent to acquire the custodian.
To further aid its storage solutions, Bakkt has been working with global bank BNY Mellon to set up "geographically-distributed" private key storage, White wrote.
BNY Mellon has a long history of storing institutional clients' assets, including hedge funds, asset managers and broker-dealers, he said.
The exchange has also secured insurance for funds stored offline.
"Bakkt uses both warm (online) and cold (offline) wallet architecture to secure customer funds. The majority of assets are stored offline in air-gapped cold wallets that are insured with a $100,000,000 policy underwritten by leading global insurance carriers," he wrote, though he did not identify who these carriers were.
White also confirmed Monday that Bakkt was seeking status as a qualified custodian through the New York Department of Financial Services. If granted, the exchange would be able to provide a regulated custodian for any crypto assets that it holds, which may ease its launch of physical bitcoin future contract.
As previously reported, Bakkt's original plan to custody bitcoin itself and settle contracts through its parent firm's warehouse, ICE Clear US, may fall into a regulatory gray area. Its launch has been indefinitely delayed pending approval by the U.S. Commodity Futures Trading Commission.
Adam White image via CoinDesk archives
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.