Galaxy and Bakkt Linked Bitcoin Trading to Regulated Custody

Galaxy Digital and Bakkt announced a joint service on June 10, 2020 to help asset managers buy, sell and hold bitcoin. Galaxy Digital Trading would handle market access and execution, while the Bakkt Warehouse would safeguard clients’ bitcoin. The firms presented the connection as a single institutional workflow spanning onboarding, trading and custody.

The development mattered because it joined two functions that professional investors could otherwise have to arrange separately. Bitcoin traded across fragmented venues, while holding the asset introduced private-key, operational and compliance questions unfamiliar to many conventional funds. The partnership did not create a new cryptocurrency, exchange-traded product or bank deposit. It connected an over-the-counter trading business to a regulated custody operation.

Dividing execution from safekeeping

Galaxy said its trading desk operated around the clock and sourced liquidity from more than 30 venues and providers. It also said the desk had traded more than $1 billion across bitcoin and other digital assets during the three months ended March 31, 2020. Those are company-reported activity measures: the announcement did not break out bitcoin volume, define whether the figure counted both sides of trades or provide a venue-by-venue reconciliation.

Bakkt supplied the custody leg through the Bakkt Warehouse. Bakkt’s institutional custody materials identified the operator as Bakkt Trust Company LLC, a limited-purpose trust company regulated by the New York State Department of Financial Services and serving as a qualified custodian of bitcoin. Its materials said customer bitcoin was divided between warm and cold wallets, with most stored offline, and that the two wallet types were covered by insurance policies totaling $125 million.

Those controls addressed custody mechanics, not bitcoin’s price risk. Insurance coverage was not equivalent to a guarantee against every loss, and regulatory supervision of the custodian did not amount to government approval of bitcoin as an investment.

An institutional bridge, not proof of adoption

The firms said the service responded to increased interest from traditional asset managers seeking physical bitcoin exposure. Bakkt reported that more than 70 firms had been onboarded to its Warehouse by June 10. Neither company disclosed how many clients had used the new combined service, how much bitcoin they had acquired, the fees charged or whether any committed assets were waiting to transfer.

That distinction was important in the event-day market context. CoinDesk’s contemporaneous report noted that Bakkt’s bitcoin options had seen periods of no trading and that its monthly options volume remained at zero for the week when the partnership was announced, even though its futures had traded more actively. Options volume is not a direct measure of custody demand, but it cautioned against treating the announcement itself as evidence of broad institutional participation.

Galaxy’s own first-quarter financial release also showed why trading scale did not automatically translate into earnings. For the three months ended March 31, 2020, Galaxy Digital Holdings LP reported a $27.7 million net comprehensive loss, largely attributing it to realized losses on continuously traded digital assets and operating expenses. That U.S.-dollar period result covered the broader business, not just the trading affiliate involved with Bakkt.

What June 10 established

The verifiable milestone was operational and institutional: Galaxy and Bakkt publicly offered a connected route from execution to regulated bitcoin custody. The arrangement reduced the number of separate relationships an asset manager might need to coordinate and paired Galaxy’s liquidity access with Bakkt’s safekeeping controls.

It did not establish a market-wide shift, a particular inflow or a bitcoin price effect. No execution timestamp, customer allocation or attributable spot-market dataset was disclosed, so this reconstruction makes no return, volume-impact or assets-under-custody claim for June 10, 2020. The significance lay in the infrastructure being offered, while actual uptake remained unreported.