Bakkt is expanding its custody services shortly after its quarterly earnings report showed assets under custody declined 28%.
Crypto firm Bakkt appears to be returning to digital asset custody as its primary business, adding support for six new coins, according to an announcement on Nov. 15.
Aside from Bitcoin (BTC) and Ether (ETH), Bakkt will expand its custodial support to include Bitcoin Cash (BCH), Dogecoin (DOGE), Ethereum Classic (ETC), Litecoin (LTC), Shiba Inu (SHIB) and USD Coin (USDC). The company expects to add more coins to its custodial services in early 2024.
The custody of digital assets focuses on the safeguarding of cryptographic keys, which are crucial for accessing and transferring assets. Various security measures are employed by custodians, such as Bakkt, to protect assets, including cold storage of coins and multisignature technology that demands multiple approvals for access.
The announcement follows Bakkt’s release of its quarterly earnings report on Nov. 14, when the company disclosed an adjusted EBITDA loss (non-GAAP) of $21.6 million, a 30% decrease year-over-year due to a reduction in compensation and benefits.
According to the report, Bakkt saw its crypto revenue reach $191.8 million in the third quarter of 2023 thanks to the acquisition of Apex Crypto in April. Over the quarter, the company generated a total of $204.8 million in total revenue. In terms of assets under custody, Bakkt reported $505.7 million, a decrease of 28% over last year.
To strengthen its crypto custody arm, Bakkt is also developing partnerships. According to the company’s quarterly report, it plans to offer clearing and custodial services for the Wall Street-backed crypto exchange EDX Markets, initially serving as a backup qualified custodian. Among Bakkt’s new clients on custodial services are Bitcoin platform Unchained and LeboBTC, a crypto consulting firm for institutional investors.
“The events of the past year have revealed why qualified crypto custody is so necessary,” Gavin Michael, CEO of Bakkt, said in a statement.
Expanding custody services is also an important aspect of Bakkt’s strategy for targeting business-to-business clients. In February, the company announced that it would sunset its consumer-facing app launched in 2021 in order to focus on institutions amid the crypto winter.
Many traditional financial institutions are also targeting the custody of digital assets. In 2022, BNY Mellon, the oldest bank in the United States, launched a digital custody platform to safeguard ETH and BTC holdings for selected clients. DZ Bank, Germany’s third-largest bank, also began offering crypto custody to institutional investors earlier this month.