Bakkt, the cryptocurrency exchange and platform project from Intercontinental Exchange, has announced the acquisition of crypto custodian, Digital Asset Custody Company (DACC).
DACC provides a range of crypto and digital asset custody services aimed at institutional clients, based on its proprietary technologies, including digital security, cold storage and hot wallet services. Terms of the deal were not disclosed.
Bakkt has also sought approval from the New York Department of Financial Services to become a trust company and, in this capacity, serve as a qualified custodian for digital assets, as part of its strategy to provide an end-to-end, regulated platform for crypto trading, custody and clearing.
ICE first announced plans to for its cryptocurrency platform in August last year, drawing on support from non-financial organisations, including Microsoft and Starbucks, to launch a federally-regulated market and warehouse for digital assets.
Bakkt will initially be used for trading and conversion of Bitcoin versus fiat currencies by both institutional and retail clients, and it will be based on Microsoft’s cloud technology. The exchange was originally slated to launch in November last year, but was then delayed until “early 2019” as the firm awaited regulatory permissions from the Commodity Futures Trading Commission (CFTC).
Institutional-level custody has been cited as one of the main stumbling blocks for greater institutional participation in digital asset markets, with the Securities and Exchange Commissions’ chair, Jay Clayton, highlighting it in November last year as one of the main issues holding back Bitcoin ETFs.
Other firms, including Coinbase and Fidelity Digital Assets – the crypto business line of asset manager Fidelity Investments – have also made their respective plays in crypto custody, as firms ramp up their push to attain regulatory approval.
“DACC shares our security-first mindset and brings extensive experience offering secure, scalable custody solutions to institutional clients”, said Adam White, chief operating officer at Bakkt, in a blog post.
“The team’s experience integrating multiple blockchains and operating cutting-edge consensus mechanisms is a valuable addition to our team and future product line. As we look to scale and support custody of additional digital assets, DACC’s native support of 13 blockchains and 100+ assets will serve as an important accelerator, and we’re pleased to welcome Matthew Johnson, Adam Healy, and the entire DACC team to Bakkt.”
At the start of the year, Bakkt raised $182 million from its first funding round that included a consortium comprising Boston Consulting Group, CMT Digital, Eagle Seven, Galaxy Digital, Goldfinch Partners, Alan Howard, Horizons Ventures, Intercontinental Exchange, Microsoft’s venture capital arm, M12, Pantera Capital, PayU, the FinTech arm of Naspers, and Protocol Ventures.