Galaxy Digital, a financial services and investment management company providing digital asset exposure for institutional and accredited investors, and digital derivatives trading platform Bakkt, have partnered to launch a white-glove service for asset managers looking to acquire, build positions in, and store bitcoin.
Galaxy Digital Trading, 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 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,” says Tim Plakas, head of Sales at Galaxy Digital Trading. “These funds expect the same calibre 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,” says 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.”
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 USD1 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,” adds Plakas.
After launching an end-to-end regulated futures market for BTC in 2019 with ICE Futures US and ICE Clear US, 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 USD125,000,000 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 USD500,000,000 in additional insurance coverage, subject to underwriting criteria.