Cryptocurrency Custodian BitGo Endorsed By Goldman SachsOctober 19, 2018
Mike Novogratz, billionaire and former partner with Goldman Sachs Group Inc, along with Goldman Sachs Group Inc is investing in BitGo Holdings Inc. Mike Novogratz founded Galaxy Digital Ventures.
BitGo organized a “series B” fundraising for which Novogratz contributed about $15 million via Galaxy Digital Ventures. The combined fundraising by Goldman Sachs brought in a total of $57.5 million.
Clients who have surplus money have been forever asking the bank about the different ways to hold these assets. The investment by the two firms serves as an endorsement to BitGo owing to their Wall Street roots. This will, in turn, help BitGo to attract several reputed and wealthy investors as their customers.
The US regulation requires that high-value money managers entrust the assets of the clients to a qualified custodian. The qualified custodians are mostly industrial pillars like the “State Street Corp” and “Bank of New York Mellon Corp.”
Since cryptocurrencies are vulnerable to hacker attacks, traditional firms expressed their unwillingness in the matter. This refrainment by conventional firms eventually kept away several significant investors from the cryptocurrency market.
This reluctance by traditional firms has given the opportunity for startup companies like BitGo with a chance to take over the role of the qualified custodian as their business.
Mike Belshe, BitGo’s co-founder and chief executive officer, stated: “For cryptocurrencies to reach their full potential, we need to conquer that.” He further added, “If you are investing other asset classes, you’re probably not worried about asset disappearance — but with this one, people still do have that fear.”
BitGo is a Palo Alto-based company that was founded in the year 2013, and the company has been offering digital wallets with multiple signatures for the transactions. The company also provides with offline vaults to store Bitcoin and other rival currencies. Since the deal with Custodian Kingdom Trust did not work as prospected, BitGo decided to build BitGo Trust Co, which is its own qualified custody business.
BitGo in the fundraising rounds has gathered a total of $70 million. The company has served for more than 75 tokens and currently holds $2 billion in assets.
Novogratz, a former macro trader, became one of the prominent Bitcoin and Digital Assets Champion. Widespread adoption of technology by the crypto-community is a point of attraction for Novogratz to eventually have him build the publically traded merchant bank for the crypto community with support from the works of Goldman Sachs and Fortress Investment Group.
While digital currency enthusiasts are of the opinion that the institutional grade storage will bring in more investors, there are significant roadblocks in the process.