Goldman Sachs And Galaxy Digital Invest $15M In BitGo’s $59M Series B
Goldman Sachs, one of Wall Street’s most crypto-friendly investment banking firms, has once more demonstrated how serious it is about cryptocurrency by jumping in on yet another multimillion funding round for a crypto-related project.
Goldman Sachs, alongside Mike Novogratz’s Galaxy Digital Ventures, led a host of other investment backers in raising a $58.5 million during crypto startup BitGo’s Series B funding round.
BitGo is an institutional grade cryptocurrency wallet provider and custodian. The company offers a multi-signature wallet solution accessible via a web browser (user retains private keys) and a cold storage service similar to Coinbase Custody.
BitGo has raised $70 million so far
As announced on Thursday, the bank and former partner Novogratz contributed a total of approximately $15 million during the funding round reports Bloomberg.
The conclusion of the Series B round brings BitGo’s fundraising total so far to about $70 million, and the participation of the two Wall Street companies raises the profile of the Silicon Valley cryptocurrency custodian.
Regulated custodians will attract institutional money
Many traditional money managers remain reluctant in putting their clients’ assets into digital currencies due to various reasons, chief among them regulatory and security concerns related to holding these unique assets.
This unwillingness by Wall Street has encouraged crypto startups that are offering major investors a chance to hold digital assets via regulated custodial platforms like BitGo.
According to BitGo founder and CEO Mike Belshe, the availability of a custodial platform that removes the element of uncertainty and fear is what the market needs to see increased crypto adoption.
In an interview reported on by Bloomberg, Belshe said that crypto needed this to happen for it to reach its full potential.
“If you were investing in any other asset class, you’re probably not worried about the asset just disappearing — but this one, people still have that fear.”
BitGo is a pioneer of institutional custody
BitGo first launched in 2013, growing to become one of the top crypto startups. The firm currently holds nearly $2 billion worth of crypto on behalf of its clients. It has received regulatory approval that allows it to operate as a qualified cryptocurrency custodian.
Michael DuVally, Goldman’s spokesperson, said that institutional participation within the crypto market would primarily rely on the availability of “secure and regulated custody solutions.” He then added:
“We believe that a custody offering is a logical precursor to digital asset market making.”
But even though regulated custodial solutions like BitGo and Coinbase Custody are available, bringing the institutional investor on board has remained a big challenge. It is difficult, mainly due to the continued notion that crypto isn’t ready yet.
Things might change for BitGo, though. With backing from giants like Goldman Sachs, the startup has the kind of rising profile that could attract big money investors.
Rana Yared, a director at Principal Strategic Investments, thinks that BitGo has the product and management team to guarantee further adoption. She added:
“We view our investment in BitGo as an exciting opportunity to contribute to the evolution of this critical market infrastructure.”
Crypto Custody getting bigger
The race to have institutional investors take up crypto has seen several mainstream firms indicate the willingness to explore the custodial service space.
Some of the traditional investment players actively involved in the field are Goldman Sachs and Fidelity Investments, which have initiated plans to launch into blockchain and crypto products on behalf of their clients.
For instance, leading asset manager Fidelity Investments recently announced the launch of Fidelity Digital Asset Services, a company that would help the institutional investor to access custodial as well as trading services.
Fidelity Investments has 27 million clients, with over $7.2 trillion in assets under management and already has a first client, Mike Novogratz’s Galaxy Digital.