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New Institutional Bitcoin Product on the Horizon as Bakkt Partners with Galaxy Digital

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Digital asset custody and derivatives solutions provider Bakkt has partnered with digital asset manager Galaxy Digital to develop a new institutional bitcoin product. The new partnership will see Bakkt ‘s custodial services offered alongside the Galaxy Digital Trading (GDT) engine match and trading platform.

As per Bloomberg ‘s interview with John Conneely, head of Bakkt ‘s custody, the new collaboration was inspired by the growing institutional demand for bitcoin exposure. Moreover, Galaxy Digital will seek liquidity from more than 30 market markers and will be able to trade on its GDT platform 24 hours a day.  According to the Head of Sales at Galaxy Digital Trading, Tim Plakas:

“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.”

New institutional bitcoin product will ease the growing institutional demand for BTC

Bakkt has been offering regulated bitcoin futures to clients since October of last year. Bakkt also offers institutional-standard custodial solutions for the secure storage of bitcoins dubbed Bakkt Warehouse.

On the other hand, Galaxy Digital, which is owned by Bitcoin enthusiast Mike Novogratz, offers a wide range of cryptocurrency financial solutions. The partnership between the two firms will see the best-in-class services offered by the two institutions come together to ease the growing demand for bitcoin exposure by major institutions.

 

 

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Furthermore, Bakkt combines both cold and warm storage services to preserve crypto assets. The majority of the funds are stored offline, which guarantees more security from hackers than online storage. Notably, the crypto assets stored in Bakkt Warehouse are protected by a massive $125 million insurance policy, with clients able to buy over $500 million in extra protection.

The derivatives platform is also working on other significant projects, such as the development of a retail-oriented cryptocurrency mobile app. Some recently disclosed details of the mobile app show it has incorporated some other third-party crypto wallets and features.

 

Germany Clarifies Bitcoin As Financial Instrument and Crypto Custodians as Financial Institutions

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EU’s Top financial authority, Bafin is reportedly recommended bitcoin as financial instruments and the crypto custodians as the financial instruments.

The recommendation was made following the AMLD5 ( fifth EU Money Laundering Directive) which rolled early this year. Interestingly, AMLD5 will also have an impact on Germany’s Banking Act and Payment Supervision Services Act. Noticeably, in a press release officially released on March 03, Bafin notes that;

“[A] digital representation of a value that has not been issued or guaranteed by any central bank or public body and is not necessarily linked to a currency specified by law and that does not have the legal status of a currency or money, but is accepted as a medium of exchange by natural or legal persons and can be transmitted, stored and traded electronically”

It was also noted that the new classification that BaFin provides also complies with the guidelines shared by intergovernmental agencies such as FATF (Financial Action Task Force). However, what’s more, interesting is that the agency also recommended crypto custodial platforms.

While Bafin considers crypto custodial providers like financial institutions, it also states that these platforms must obtain a license to continue operating their businesses in the country. More so, it also notes that platforms operating within the country without a license are advised to secure one by the end of November 2020. However, these platforms should also ensure their readiness to apply for a license by the end of this month.

What’s more, the platforms which are operating in other regions should apply for a new license to operate their business in Germany and cannot passport the license of other countries to Germany.

In a nutshell, Germany appears to be a crypto-friendly regulatory region. Consequently, as soon as the country hints its upcoming plan in January, reports rolled the next month, February, noting that almost 40 banks have applied for the license. Besides, stock exchanges including Germany’s second-largest stock exchange, Boerse Stuttgart also showed interest in the crypto ecosystem.