Galaxy Digital has settled to acquire BitGo for a whopping sum of $1.2 billion. With this acquisition, another company is added to the list of crypto-related mergers and acquisitions.
There was news doing the rounds last month that a crypto-focused company offering financial services, Galaxy Digital was buying BitGo. It has now been confirmed that Galaxy Digital is indeed buying BitGo at a deal valued at $1.2 billion.
This is a big thing for BitGo, which is a crypto custodian and crypto services firm. They also run wrapped Bitcoin, which is a fun way to get Bitcoin on the Ethereum blockchain and into the world of the DeFi. This is a big move with a big number attached.
It is a big moment for the crypto market and speaks volumes about the market’s situation.
The amount is double the valuation that was seen for a rumor that went around in the fall regarding PayPal buying BitGo also. That number was around $750 million at that time which was around October and November last year when the news circulated. These large players always try to buy smaller players and these numbers come in and out with deals sometimes closing and sometimes not.
Speaking of the custodian needs that players like Galaxy Digital need, they need to have the infrastructure of the back-end. It is not necessarily interesting to the normal person but you need that to make these applications work. Otherwise, you cannot offer crypto; you cannot offer a suite of services that a firm like galaxy needs. BitGo itself is interesting because they actually have a very robust tech package on the show. They have wrapped Bitcoin, which is one of the largest liquidity providing assets for the DeFi industry. BitGo also has a bunch of Bitcoin on its books as a reserve asset. If that industry is to grow then Galaxy Digital itself is going to become a larger and larger part of decentralized finance.
From a tech perspective, it is laudable that Galaxy Digital has purchased one of the biggest players in DiFi.
These are not the only crypto mergers and acquisitions that happened recently. Blockchain.com also made an announcement probably smaller than the $1.2 billion acquisition that Galaxy Digital is pursuing. Nevertheless, it reflects that pockets are fat right now in the crypto space and this consolidation is not going anywhere anytime soon.
Custody is a very important part of the crypto space, which allows you to hold the token.
There is a huge technological barrier to entry for people to hold crypto that many in the industry may overlook. Therefore, for an average person when you are dealing with cryptocurrency there is no FDIC insurance backing up if you lose it or it gets hacked. People need to have control over their assets and many people are not comfortable with that yet. They are not comfortable with the idea of taking responsibility for their money so then you have custodians coming into play. These custodians make up a huge part of the ecosystem, filling the gap for those people.