On Monday (April 29), Adam White, the Chief Operating Officer (COO) of Bakkt, a subsidiary of the Intercontinental Exchange (ICE), explained how the new crypto platform will be protecting customers' funds, and announced the acquisition of crypto custody solution provider Digital Asset Custody Company (DACC).
As most of you probably know already, on 3 August 2018, Intercontinental Exchange (ICE), "a leading operator of global exchanges, clearing houses, data and listings services," announced that it was starting a new company called Bakkt that would be "working with a marquee group of organizations including BCG, Microsoft, Starbucks, and others, to create an integrated platform that enables consumers and institutions to buy, sell, store and spend digital assets on a seamless global network."
ICE also said that as "an initial component of the Bakkt offering," its "U.S.-based futures exchange and clearing house" planned to "launch a 1-day physically delivered Bitcoin contract along with physical warehousing in November 2018, subject to CFTC review and approval." That launch has been delayed since Bakkt is still waiting the U.S. Commodity Futures Trading Commission's approval.
In a blog post for Bakkt published earlier today, White started by explaining how his company wanted to set "a new standard for securely storing digital assets."
Here are some of the main highlights:
- "Bitcoin delivered upon contract settlement will be stored by Bakkt."
- In order to "provide regulated custody," Bakkt has "filed with the New York Department of Financial Services for approval to become a trust company and in this capacity serve as a Qualified Custodian for digital assets."
- "... we’ve spent two years developing a custody solution from the ground up."
- "Bakkt uses both warm (online) and cold (offline) wallet architecture to secure customer funds.. Both wallet architectures employ on-chain and off-chain security measures to safeguard cryptographic keys..."
- "Customer funds are also protected by layers of automated controls including multi-factor authentication, destination address whitelisting, and role-based permissions."
- "Bakkt uses FIPS 140–2 level 3 or higher hardware security modules (HSM) to manage and secure its warm wallet cryptographic keys."
- "All cold wallet cryptographic keys are encrypted, sharded and are geographically distributed in an m-of-n architecture."
- "Private keys are never transferred across any open or unencrypted communication channel..."
- "All cryptographic systems are secured in bank-grade vaults and datacenters that are protected with 24/7 physical security."
- "Additionally, Bakkt is working closely with BNY Mellon to offer geographically-distributed storage of private keys secured by the bank."
- "Bakkt leverages one of the world’s most sophisticated cybersecurity programs, and the same systems that protect the New York Stock Exchange."
- "Bakkt implements strict operating procedures to direct the safekeeping and storage of customer funds."
White also took this opportunity to announce the acquisition of Digital Asset Custody Company (DACC).
DACC has a piece of proprietary technology called "Enclave Wallet" that powers its three crypto custody products: Enclave Time Lock; Enclave Cold Storage; and Enclave Air-Gapped Hot Wallet.
White says that DACCC shares their " security-first mindset and brings extensive experience offering secure, scalable custody solutions to institutional clients," and that the DACC team's "experience integrating multiple blockchains and operating cutting-edge consensus mechanisms" will help Bakkt's existing custody team and improve their ability to launch future custody-related solutions: "As we look to scale and support custody of additional digital assets, DACC’s native support of 13 blockchains and 100+ assets will serve as an important accelerator."
Over on Twitter, Anthony Pompliano (aka "Pomp"), Co-founder & Partner at Morgan Creek Digital, was quite pumped by this latest Bakkt news:
The New York Stock Exchange owners just announced that they bought a custodian service focused on Bitcoin and cryptocurrency.— Pomp 🌪 (@APompliano) April 29, 2019
This is just the beginning.
Every stock, bond, currency, and commodity will be digitized in the future.
GAME ON 🙏🏽
Featured Image Courtesy of Bakkt