BNY Mellon has made its first foray into the cryptocurrency world by collaborating with digital currency exchange Bakkt to help it launch a custody service.
Bakkt, the incoming bitcoin derivatives exchange owned by Intercontinental Exchange (ICE), announced it had acquired the Digital Asset Custody Company (DACC) this week, to develop a secure digital asset storage service.
In order to further advance its crypto custody offering, Bakkt is collaborating with BNY Mellon to set up private key storage, according to Bakkt’s chief operating officer Adam White.
“Bakkt is working closely with BNY Mellon to offer geographical-distributed storage of private keys secured by the bank,” said White in an online blog.
“BNY Mellon has a longstanding history of safeguarding the assets of institutional clients such as hedge funds, asset managers and broker-dealers, and we’re excited to work with them.”
There is increasing demand for an established custodian to provide custody of cryptocurrencies in order for institutional investment in the emerging asset class to take offer.
A number of specialist crypto firms have begun to launch services targeted to institutional clients, including safekeeping of crypto assets and trading services, however, traditional custody providers have shied away.
State Street was the first of the top custodians to announce their interest in crypto custody, but has yet to make any real intention in launching a service. Meanwhile, Northern Trust currently provides fund accounting and reporting services for a few select clients that invest in crypto currencies. It also exploring ways to digital store and safeguard crypto assets for its hedge fund clients.