Sources: CoinDesk
Translation: Nick
According to four insider sources, cryptocurrency-focused financial services firm Galaxy Digital is nearing a deal to acquire BitGo, a U.S.-compliant crypto custody provider. Both companies declined to comment on the negotiations.
Key Details of the Potential Acquisition
- Strategic Fit: Galaxy currently lacks custody services, making BitGo a logical acquisition target.
- BitGo's Portfolio: Beyond custody, BitGo manages WBTC (Wrapped Bitcoin), a service with $8.5B in locked value that bridges Bitcoin to Ethereum-compatible tokens.
- Market Trend: The 2020–2021 crypto boom has spurred heightened activity among custody providers, a critical pillar for institutional crypto adoption (e.g., Fireblocks’ $133M raise and partnership with BNY Mellon).
Broader Industry Context
- PayPal's Parallel Move: The payments giant previously explored acquiring BitGo but pivoted to a $500M deal for custody firm Curv, expected to close mid-2021.
- Institutional Interest: BitGo is under consideration by Goldman Sachs for its proposed Bitcoin fund targeting high-net-worth clients.
Galaxy's Growth:
- Revenue from trading surged 842% YoY in Q4 2020 ($238.7M).
- Plans for a U.S. public listing in late 2021.
- Member of the NYDIG institutional trading consortium alongside Morgan Stanley.
Funding and Backers
- BitGo has raised $69.5M across six funding rounds, including investments from Galaxy Digital.
FAQs
Q1: Why is Galaxy Digital acquiring BitGo?
A1: To expand into crypto custody services, complementing its existing trading and investment banking operations.
Q2: How does BitGo’s WBTC service work?
A2: It "wraps" Bitcoin into ERC-20 tokens, enabling Bitcoin use on Ethereum-based DeFi platforms.
Q3: What’s driving institutional demand for crypto custodians?
A3: Rising crypto adoption among banks and asset managers necessitates secure, compliant storage solutions.
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