Cryptocurrency startup Bakkt LLC, founded by New York Stock Exchange owner Intercontinental Exchange Inc. today entered the bitcoin institutional custody business after obtaining approval from the New York Department of Financial Services.

The service, an extension of the company’s Bakkt Warehouse, offers bitcoin custodial services to institutional investors. A custodial service involves an entity holding a client’s property, in this case bitcoin, on behalf of the client, with responsibility for the safety of the property. In a way, it could be described as a digital bank safe, with Bakkt Warehouse both securing and guaranteeing the security of the bitcoin it holds for its clients.

Bakkt Warehouse previously offered custodial services for institutional investors trading in Bakkt Bitcoin Futures contract. The NYDFS approval allows it to extend the service to bitcoin itself. The new support for bitcoin launches with three companies immediately signing up: Pantera Capital, Galaxy Digital and Tagomi.

The service offers extensive physical, operational and cybersecurity safeguards. On-premises data centers and dedicated network connectivity between operational sites are said to eliminate reliance on multitenant systems, colocation facilities and third-party data centers. Those sites use biometrically controlled bank-grade vaults and enterprise-grade hardware security modules to ensure both safekeeping and availability,

In addition, geographically distributed primary and secondary facilities are part of the offering to ensure redundancy and disaster recovery. The feature is important should the primary data center ever go offline. Data centers also include 24-by-7 video monitoring, armed guards, security operations and incident response teams.

“Safely storing digital assets demands a comprehensive approach to custody,” Bakkt said in a Medium post today. “Institutions and sophisticated investors need more than cutting-edge technology. They require proven infrastructure, robust operational controls and independent oversight.”

The announcement comes as Bakkt’s existing products start to take off. Bakkt Bitcoin Futures contracts bombed on debut Sept. 23 but by Oct. 27 started to gain keen interest from institutional investors. That trend has continued with 1,741 futures traded on Nov. 9, a new record high for the product.

Next off the rank for Bakkt will be regulated option contracts on futures. Currently scheduled to launch Dec. 9, the Bakkt Bitcoin Options contract is designed to allow institution investors to hedge or gain bitcoin exposure, generate income and offer cost and capital efficiencies.

Image: Bakkt