Goldman Sachs, a large investment bank and Galaxy Digital Ventures, billionaire Mike Novogratz’ company, invested $15 million in BitGo Holdings, which develops solutions for safe storage of crypto assets. Thus, the total amount of BitGo funds received during the Series B financing round reached $58.5 million.
Proud to have @GoldmanSachs and #GalaxyDigital on our side: Goldman and billionaire Mike Novogratz are investing in cryptocurrency custodian BitGo https://t.co/BYuEGDYIvt … via @technology— BitGo (@BitGo) October 18, 2018
BitGo provides services for the storage of more than 75 cryptocurrencies and tokens, and its stores contain assets for more than $2 billion, according to its own statement. Since 2013, the company has already attracted about $70 million. BitGo attracted recent investments in December 2017, when it received $42.5 million from Valor Equity Partners. Then the startup announced the closure of Series B, but the new funding means it was renewed.
U.S. regulators require major cash managers to entrust client assets to a qualified custodian. However, the reluctance of many traditional firms to retain digital currencies has brought many large investors out of the market. This gives startups like BitGo a chance to continue their business. Representatives of the Californian cryptocurrency startup announced in September that they have received a work permit in the United States as a digital asset custodian oriented on institutional clients.
“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,” Mike Belshe, BitGo’s co-founder and chief executive officer, said.
Permission to launch BitGo Trust will allow the project to offer regulated services of a qualified custodian that meet the requirements of AML / KYC. According to BitGo representatives, over time, the company plans to become a broker-dealer. They also believe that the BitGo Trust services will be in significant demand among institutional players who need financial products that strictly comply with all regulatory requirements.
Also in the summer, it was reported that Goldman Sachs is considering the possibility of launching custodial services for cryptocurrency funds, and the investment in BitGo confirms that work in this direction is really underway. The custodial service will reduce the risk of digital assets loss as a result of various types of hacker attacks.
“In response to client interest in various digital products we are exploring how best to serve them in this space. At this point we have not reached a conclusion on the scope of our digital asset offering,” a spokesman for Goldman Sachs said.
Also, the rumor has it that the bank refuses to create a unit for working with digital money. However, representatives of the company denied this. Institutional clients of the bank are asked to add the possibility of bitcoin trading. Therefore, the financial institution is extremely interested in working with digital money, but it will take a long time for it to make this possibility real.
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