Galaxy Digital and Bakkt Unveil Joint Trading and Custody Service for Institutional Investors
Galaxy Digital, the diversified financial services and investment management company providing quality digital asset exposure for institutional and accredited investors, and Bakkt®, the digital asset derivatives trading and custody platform majority-owned by Intercontinental Exchange (“ICE”), today announced their partnership to launch a collaborative white-glove service for asset managers looking to acquire, build positions in and store bitcoin (“BTC”).
Galaxy Digital Trading (“GDT”), Galaxy Digital’s affiliate, is providing market access and trading capabilities, while the Bakkt Warehouse, a qualified custodian of bitcoin regulated by the New York State Department of Financial Services, is safeguarding digital assets for clients. This direct connectivity between Galaxy Digital and Bakkt enables the two companies to offer clients best-in-class efficiency through the entire process of onboarding, trade execution and storage of their digital assets.
“We designed this partnership to service the uptick in demand our two firms have received from traditional asset managers seeking access to physical bitcoin,” said Tim Plakas, Head of Sales at Galaxy Digital Trading. “These funds expect the same caliber of market knowledge and trade execution expertise in BTC as they would expect from any established traditional finance desk, and Galaxy provides that, while Bakkt delivers the high level of regulatory-compliant security required for storing digital assets. Together, Galaxy Digital and Bakkt offer a safe, efficient, and well-regulated route into physical bitcoin access, one that has been already proven successful in the macro hedge fund space.”
“Alongside our adoption of safekeeping requirements that are unique to the digital asset class and its infrastructure, the Bakkt Warehouse uses the same best-in-class, trusted enterprise security framework that protects ICE’s dozen exchanges around the world, including the New York Stock Exchange,” said John Conneely, Head of Custody Business Development at Bakkt. “As one of the largest trading operations in the digital asset space, Galaxy Digital’s execution expertise and Bakkt’s custody solution are highly complementary.”
Trading & Market Access
GDT is uniquely positioned to source liquidity from more than 30 venues and providers, mitigating the risks of market fragmentation and wider spreads impacting counterparty performance.
The business operates a 24-hour global trading model and provides sophisticated trading strategies spanning spot trading, lending, derivatives and structured products. In the first quarter of 2020, GDT traded more than $1 billion of volume across BTC and other digital assets.
“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,” added Plakas.
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After launching the first end-to-end regulated futures market for BTC in 2019 with ICE Futures U.S. and ICE Clear U.S., Bakkt began offering institutional bitcoin custody at the Bakkt Warehouse and has onboarded more than 70 firms to the Bakkt Warehouse.
Bakkt uses both warm (online) and cold (offline) storage to secure customer funds, with the majority of funds held offline. Both wallet types provide a zero-trust methodology and are covered by a $125,000,000 insurance policy. In addition, Bakkt works with the Digital Asset Risk Transfer team from Marsh, the world’s leading insurance broker, providing customers with the option to purchase more than $500,000,000 in additional insurance coverage, subject to underwriting criteria. Additional protections include:
- SOC 1 Type I examination of Bakkt and SOC 2 Type II examination of ICE infrastructure supporting the Bakkt Warehouse by KPMG and PwC, respectively;
- On-premise datacenters and dedicated network connectivity between operational sites to eliminate reliance on multi-tenant systems, colocation facilities, and third-party data centers;
- Regular external, internal, and physical penetration tests to evaluate the operation’s facilities; and
- Fortune 500 company backing