The financial services giant Goldman Sachs has made yet another stake in the cryptocurrency industry by investing in cryptocurrency custodian BitGo Holdings Inc., according to an October 18 press release.
Goldman Sachs, along with Galaxy Digital Ventures LLC, contributed $15 million to Series B of BitGo's funding round, bringing the amount raised in that round to $57.5 million. This money will go toward the development of a $1 trillion crypto wallet.
The Dodd-Frank Act requires that investors with customer assets worth over $150,000 to store the assets with a "qualified custodian." These custodians are usually mega-institutions that have maintained a proven track record in the financial industry, such as State Street Corporation and BNY Mellon Corp.
But as most people involved in the cryptosphere know, most of the big names in the financial industry are wary of getting involved with cryptocurrency over fears of wild price fluctuations and security issues. This reticence gives smaller businesses such as BitGo the opportunity to go after the big-money clients.
The press release states that BitGo announced the launch of BitGo Trust Company earlier this month and is reportedly "the first qualified custodian purpose-built for storing digital assets."
"This strategic investment from Goldman Sachs and Galaxy Digital Ventures validates both our market opportunity and unique position," said Mike Belshe, CEO of BitGo. "No one is better positioned than BitGo to serve institutional investors who want to trade cryptocurrencies and digital assets. That's why we're focused on figuring out what it takes to secure a trillion dollars. The market's not there yet but our job is to be ready first."
To act as a custodian for crypto-assets, BitGo must have a way to secure massive amounts of money, hence its development of a $1 trillion wallet.
This news may come as some surprise to those who remember the August rumors that Goldman Sachs was planning to offer its own cryptocurrency custody services. However, on that front, no official announcement has ever emerged. In light of this news, the rumors appear less likely; it seems unlikely that the company would be willing to provide funding to a competitor.