CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.1% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

Bakkt (BKKT) stock spikes 16% on custody agreement with Nexo

By Kevin Donovan

19:25, 19 January 2022

Bakkt display
Bakkt partners with Nexo to warehouse bitcoin and ether - Photo: Bakkt Holdings

Digital asset platform Bakkt Holdings and cryptocurrency financial services company Nexo announced a partnership for Bakkt to custody bitcoin and ether in the Bakkt Warehouse.

The partnership gives Bakkt (BKKT) additional cryptocurrency reserve liquidity, while Nexo gets an undisclosed return on its assets.

“While some of these updates might seem mundane from the standpoint of traditional finance, (this is) hugely important in the context of crypto,” said Nexo Head of Communications Troy Gravitt. “It's the first-hand mainstreaming of the technology. It's a technology that looks increasingly like it will one day replace the underlying mechanics of most of the US and global financial system.”

The news sent Bakkt stock spiking 16.3% in early Wednesday trading to a $6.04 per share session high, from Tuesday’s $5.24 closing share price. Bakkt stock gave back its early gains, however, as equities experience a broader sell-off.

In late afternoon trading, Bakkt stock was 3.44% lower on the session at $5.06 per share. Over 15 million Bakkt shares traded Wednesday. Bakkt Holdings trades over the Nasdaq exchange under the ticker BKKT.

Nexo is not a publicly traded company but has a Nexo token, which was quoted at $2.27 by Coinbase, up 1.37% over the past 24-hour period. The Nexo coin has a $1.3bn market capitalisation and 560 million coins in circulation, Coinbase reports, which is 56% of circulating supply.

Nexo mobile appNexo mobile app - Photo: Nexo

Added security for Nexo

The partnership offers an additional layer of security for Nexo, which is already insured for up to $375m and offers warm storage in military-grade vaults. The Bakkt Warehouse stores cryptocurrency assets in both warm and cold storage, rebalancing periodically.

Nexo, a cryptocurrency financial services company, allows users to borrow against, lend at interest and trade digital assets.

BTC/USD

70,907.30 Price
+2.780% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

US100

18,291.90 Price
+0.040% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 1.8

Gold

2,208.05 Price
+0.550% 1D Chg, %
Long position overnight fee -0.0188%
Short position overnight fee 0.0106%
Overnight fee time 21:00 (UTC)
Spread 0.30

ETH/USD

3,584.35 Price
+2.020% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

“As a lender - much like any bank or other lender - there's a need to custody with various institutional partners, too,” said Nexo’s Gravitt. “Having multiple counterparties reduces counterparty risk from any one relationship. If there were to be some catastrophic event, not all funds would be in play.”

Liquidity for Bakkt

As for Bakkt, the digital assets stored in its warehouse give it additional liquidity on hand, similar to any bank. 

Warm, or online, storage offers users easier access and liquidity but comes with inherent security risks. Cold, or offline, storage is a physical storage wallet that needs to be connected to an online platform to transfer digital assets.   

“As we build upon our partnerships with businesses and expand our network of operations and revenue, secure custody continues to be a pillar of Bakkt's strategy, leveraging state-of-the-art physical and cyber security, institutional-grade technology and governance, and backed by insurance,” said Bakkt chief product officer of crypto Dan O'Prey in a release.

“We recognized that Bakkt’s infrastructure and regulation-first approach to crypto was a natural fit, and we’re confident that this partnership will benefit all our clients and expand Nexo’s ability to service the unprecedented institutional demand for cryptocurrencies as well as individuals’ growing transaction volumes,” added Nexo business development executive George Manolo in the same release.

Read more: Partnership with MasterCard sends Bakkt shares 51% higher

 

 

Rate this article

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

Still looking for a broker you can trust?

Join the 580.000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading