Bakkt Announces Insurance for Bitcoin (BTC) Custody
The BTC potentially held in the wallets of Bakkt Warehouse will be insured for $125 million.
Bakkt Warehouse has been open for a few days now, and the company announced the substantial insurance for the Bitcoin (BTC) held in custody. The custodial service arrives a few weeks before the proper start of futures trading.
However, the Bakkt has not announced the deposit addresses for the wider public. Potentially, the activity of Bakkt may be discovered in the future, by blockchain analysts. At this point, it is unknown how Bakkt would choose to store the funds, and how many addresses it would use.
The size of the insurance is sufficient to cover around 12,135 BTC at current prices. According to Adam White, the offering of a custodial service is a milestone in financial technology.
“We’re thrilled with the initial interest we have seen in the Bakkt Warehouse, and continue to onboard new customers and accept bitcoin deposits. When the physically-delivered Bakkt Bitcoin Futures contracts launch on September 23rd, we will create the first fully regulated marketplace specifically designed to meet the needs of institutional firms and their clients,” commented White.
Storing BTC has been fraught with errors and risks for multiple actors, and custodial services arose as a solution for mainstream investors, who do not wish to risk using the technology directly. Wallet errors, double-spending and other types of attacks have led to the loss of significant amounts of BTC, mostly from exchange hacks.
Currently, one of the few actors offering similar insurance is Coinbase. Other exchanges rely on internal programs to protect against losses.
Ahead of the futures launch, BTC trades around $10,285.47, with price discovery depending on a 71% share of Tether (USDT) trading. BTC trades are now most active on Asian crypto-to-crypto exchanges, leaving Bakkt to rely on relatively small spot dollar-based markets.
Interest in BTC has increased over the past year, as the asset grew by more than 300%, leaving other assets behind, with only a handful of altcoins making similar gains. BTC is also the most liquid digital coin except for USDT.