Two New York-based cryptography companies hope to accommodate the growing institutional demand for a physical bitcoin.
A partnership to satisfy the request for access to physical bitcoins
In a June 10 announcement, Galaxy Digital's commercial arm and regulated bitcoin futures provider Bakkt said the service will offer asset managers and others. Investors institutional a white glove trading and custody solution.
As part of the collaboration, Galaxy will provide all trading services and features, taking advantage of its existing plugins in 30 different exchange locations. In the meantime, Bakkt will offer custodial services through its Bakkt Warehouse, which is currently used to facilitate physically regulated bitcoin contracts.
Designed to run 24 hours a day, the idea, according to Tim Plakas, sales manager of Galaxy Digital Trading, is to offer a "safe, efficient and well-regulated path in physical access to bitcoins, which has already proven to have success in the macro space of hedge funds ".
"We designed this partnership to meet the growing demand that our two companies have received from traditional asset managers looking for access to physical bitcoins," added Plakas.
An unexpected success
Although the idea of two big companies joining in this way may seem like a compelling prospect, both Bakkt and Galaxy Digital have struggled to make progress this year. As a commercial bank investing in cryptocurrency companies and trading digital assets, Galaxy Digital hasn't had much revenue since it first launched in January 2018.
Rather, it posted a net loss of $ 32,9 million in the last quarter of 2019 and suffered further losses due to the economic crisis due to the coronavirus pandemic. Galaxy Digital Trading, the subsidiary now in contact with Bakkt, was responsible for practically canceling Galaxy's other revenue streams, losing a total of $ 32,1 million in the fourth quarter of 2019.
Bakkt, on the other hand, has struggled to attract profits. The launch took place in September 2019 and, after more than a year of delays, the exchange volumes remained low. For example, there was one week in January and two weeks in late February where none of his option contracts were negotiated.
This contrasted with a larger crypto derivative space that reported record volumes in the same periods. So far this week, for example, Bakkt's total volume for monthly option contracts has been frozen at zero.
Bakkt futures saw more volume, hitting record levels last month during the halving of Bitcoin, although it is now returning to more standard levels.
