Bakkt pivots its focus to custody services and expands its supported cryptocurrencies to include DOGE, SHIB, and others.
Following a 28% decline in assets under custody, Bakkt is broadening its custody services.
Bakkt appears to be shifting its primary focus back to digital asset custody, announcing the addition of support for six new coins on November 15. In addition to Bitcoin (BTC) and Ethereum (ETH), Bakkt is expanding its custodial support to include Bitcoin Cash (BCH), Dogecoin (DOGE), Ethereum Classic (ETC), Litecoin (LTC), Shiba Inu (SHIB), and USD Coin (USDC). The company plans to include more coins in its custodial services in early 2024.
Digital asset custody involves the secure storage of cryptographic keys, vital for accessing and transferring assets. Custodians, like Bakkt, employ various security measures, including cold storage and multisignature technology, to safeguard assets.
The announcement follows Bakkt's release of its quarterly earnings report on November 14, revealing an adjusted EBITDA loss of $21.6 million, a 30% decrease year-over-year. The reduction is attributed to a decrease in compensation and benefits. Despite this, Bakkt reported $191.8 million in crypto revenue for Q3 2023, thanks to the acquisition of Apex Crypto in April. Total revenue generated during the quarter was $204.8 million, with assets under custody reaching $505.7 million, reflecting a 28% decrease compared to the previous year.
Bakkt’s Q3 2023 earnings report. Source: Seeking Alpha
Bakkt is bolstering its crypto custody arm through strategic partnerships, intending to offer clearing and custodial services for the Wall Street-backed crypto exchange EDX Markets. The company has also secured new clients for custodial services, including Bitcoin platform Unchained and LeboBTC, a crypto consulting firm for institutional investors.
The expansion of custody services aligns with Bakkt's strategy to target business-to-business clients. In February, the company announced the discontinuation of its consumer-facing app to concentrate on serving institutions amid the crypto market conditions. The move mirrors a broader trend among traditional financial institutions, with BNY Mellon and DZ Bank also entering the digital asset custody space to cater to institutional investors.