Two New York-based crypto companies hope to scoop up growing institutional demand for physical bitcoin.
As part of the collaboration, Galaxy will provide all the trading services and functionalities, leveraging its existing plugins to 30 different exchange venues. Meanwhile, Bakkt will offer custody services through its Bakkt Warehouse, which it currently uses to facilitate physically settled bitcoin contracts.
Designed to work around the clock, the idea, according to Tim Plakas, Galaxy Digital Trading's head of sales, is to offer a "safe, efficient and well-regulated route into physical bitcoin access, one that has been already proven successful in the macro hedge fund space."
"We designed this partnership to service the uptick in demand our two firms have received from traditional asset managers seeking access to physical bitcoin," Plakas added.
While the idea of two big-name companies teaming up like this may seem like a titillating prospect, both Bakkt and Galaxy Digital have struggled to make much headway this year.
As a merchant bank that invests in crypto companies as well as trades digital assets, Galaxy Digital has failed to make much, if any, revenue since it first launched in January 2018. It reported a net loss of $32.9 million in the final quarter of 2019 and warned further losses from the coronavirus.
It was Galaxy Digital Trading, the branch now hooking up with Bakkt, that was responsible for pretty much wiping out Galaxy's other revenue streams, losing a total $32.1 million in Q4.
Bakkt, on the other hand, has struggled to attract much footfall. Launching in September 2019 after more than a year of delays, the exchange's volumes have remained low.
So far this week, for instance, Bakkt's total volume for monthly options contracts was stuck at zero. Bakkt's futures have seen more volume, reaching record levels last month during Bitcoin's halving, though it's now returning to more typical levels.
UPDATE (June 10, 2020, 20:30 UTC): This article was updated for clarity.
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.