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Adam White, the COO of Bakkt announced via a Medium blog post published on April 29 that the pending Bitcoin futures exchange has made an acquisition as it forges ahead with the preparation of digital asset custody solutions for institutional clients.

White, who has been involved in the crypto space since 2013 and previously worked for cryptocurrency exchange Coinbase, acknowledged that it is important to create robust security infrastructure for the storage of digital assets.

White revealed that Bakkt acquired Digital Asset Custody Company (DACC), a firm offering crypto custodial solutions to ICO issuers and hedge funds. Bakkt did not disclose the financial details of the deal but revealed what DACC’s team is now part of the futures exchange.

“DACC shares our security-first mindset and brings extensive experience offering secure, scalable custody solutions to institutional clients,” wrote White.

DACC’s experience in integrating a number of blockchains and operating several consensus algorithms – 13 blockchains and more than 100 digital assets – is valuable to Bakkt’s custody efforts.

Despite the Bitcoin futures exchange leveraging the expertise of its parent company, Intercontinental Exchange (ICE), Bakkt has designed its own bespoke custody solutions that protect users from risks only found within the crypto space.

The platform employs both warm (online) and cold or offline wallet infrastructure to safeguard clients’ digital funds. White revealed that the platform had secured insurance for digital assets under its custody.

“The majority of assets are stored offline in air-gapped cold wallets that are insured with a $100,000,000 policy underwritten by leading global insurance carriers,” said White about the insurance policy.

A mixture of on-chain and off-chain security measures such as the enforcement of multi-sig controls are used to protect cryptographic keys. Additional security layers include multi-factor authentication, role-based permissions, and destination white-listing.

According to White:

“Role-based permissions strictly limit employee access, and systems are routinely tested to ensure a seamless transition to our parallel disaster recovery facilities.”

Bakkt employs FIPS 140-2 level 3 or higher hardware security modules (HSM) to protect the cryptographic keys of warm wallets.

Bakkt said that it secures all cryptographic systems in vaults on par with bank standards. White highlighted that Bakkt is working in partnership with BNY Mellon “to offer geographically-distributed storage of private keys secured by the bank.”

This may prove to be an important partnership because BNY Mellon has a history of working with institutional clients that include broker-dealers, hedge funds, and asset managers.

Bakkt is implementing measures to deal with insider threats and collusion. Transactions will be processed by several individuals from various teams spread across different locations.

Bakkt was announced in August last year, but its launch has been delayed several times as the U.S Commodity Futures and Trading Commission (CFTC) is yet to make a ruling on the exchange’s application to custody Bitcoin.

Bakkt’s COO Outlines How the Yet-to-Be-Approved Futures Exchange Will Safeguard Digital Assets was originally found on Cryptocurrency News | Tech, Privacy, Bitcoin & Blockchain | Blokt.

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