Bakkt, the Bitcoin derivatives trading and custody platform owned by the Intercontinental Exchange (ICE), has partnered with the investment management company Galaxy Digital to launch a joint trading and custody venture for digital assets.
The official announcement unveiled earlier today informs that Galaxy Digital Trading, an affiliate of Galaxy Digital, will provide the market access and trading capabilities for the new collaboration. The Bakkt Warehouse, on the other hand, will serve as the custodian of the funds.
Bakkt To Provide Custody
The qualified custodian of Bitcoin regulated by the New York State Department of Financial Services, the Bakkt Warehouse, will be safeguarding the digital assets for customers.
John Conneely, Head of Custody Business Development at Bakkt, emphasized his firm’s qualities to serve as custodian. He outlined that Bakkt is using the same “trusted enterprise security framework that protects ICE’s dozen exchanges.” He added that the partnership with Galaxy Digital will result in becoming “one of the largest trading operations in the digital asset space.”
Upon launching its Bitcoin futures platform in 2019, Bakkt expanded its services, and has currently onboarded more than 70 firms to the Bakkt Warehouse, the statement reads.
While the company utilizes warm (online) storage for some customer funds, the majority is stored securely on cold (offline) wallets. Nevertheless, both options provide a zero-trust methodology and are covered by an insurance policy, which recently increased by an additional $500 million.
Digital Galaxy Trading’s Responsibilities
As mentioned above, GDT will be responsible for the trading and market access, as it is “uniquely positioned to source liquidity from more than 30 venues and providers.” Thus, it will mitigate the risks of market fragmentation and wider spreads impacting counterparty performance.
The announcement notes that GDT has traded more than $1 billion of volume across Bitcoin and other cryptocurrencies in Q1 2020 alone and that the firm operates a 24-hour global trading model.
“Asset managers and hedge funds considering this service can be assured by the high standards we hold as a publicly-traded company with audited, public financial statements, and an institutional-sized balance sheet.” – said Tim Plakas, Head of Sales at Galaxy Digital Trading.
While speaking regarding the collaboration with Bakkt, Plakas said that they had designed it “to service the uptick in demand our two firms have received from traditional asset managers seeking access to physical Bitcoin.”
As a result, the product coming from Bakkt and Galaxy Digital Trading will enable them to “offer clients best-in-class efficiency through the entire process of onboarding, trade execution, and storage of their digital assets.”