Goldman Sachs and billionaire Mike Novogratz are investing in BitGo, the crypto security firm. BitGo is a partner of Evolution IRA and provides secure wallet storage for Evolution IRA accountholders.
Mike Novogratz is a noted crypto supporter and former Goldman Sachs partner.
Bloomberg reported that Goldman Sachs and Novogratz brought in a combined $15 million dollars of funding for BitGo. The $15MM is part of the Series B funding round for BitGo. An estimated $57.5 million has been brought in so far.
Custodial solutions in high demand
BitGo provides qualified custodian services to firms such as Evolution IRA, Pantera Capital, crypto exchange BitStamp, and more. The security firm claims to process an estimated $15 billion in transactions per month. Holding assets securely is perhaps the biggest missing link institutional investors have needed to fully dive into crypto investing.
BitGo offers 100% cold storage in “bank-grade” Class III vaults. These vaults often have reinforced concrete walls that are 27″ thick with additional vault safe walls that are another 12″ thick. Multi-signature wallets are popular, making it so no single party has access to the assets.
However, most important is that BitGo is a regulated trust company and therefore is a qualified custodian. Institutional investors must use a qualified custodian for their assets as they are unable to self-custody. This means endowments, pension funds and family offices are unable to hold their own private keys and cold storage wallets. They have to use a regulated and qualified custodian.
Traditional asset managers historically used firms such as the Bank of New York Mellon or State Street Corp. So far, these firms have refused to support digital assets and crypto qualified custodian solutions were few and far between.
Goldman Sachs has deep roots in Wall Street. The signal of support to back a crypto firm can have major implications in other legacy financial firms following suit. The firm has been supportive of the new asset class since the emergence of futures trading in 2017. Goldman was one of the first firm’s to clear Bitcoin futures, according to Bloomberg.
Goldman and Novogratz’s announcement comes on the heels of Fidelity revealing their plans to open a crypto exchange for institutional investors.
At one point, Goldman reportedly considered launchign their own custody solution for cryptoasssets. Their support of BitGo could a wise move in trusting the startup with deep technical expertise of the space.
Novogratz is an outspoken proponent of Bitcoin and crypto. He recently launched his crypto fund, Galaxy Digital, which is reported to have raised $300 million in capital so far.
It’s still unclear how regulatory issues will play out once the bigger players enter the space. But paths are being forged to make it easier for legacy firms to dip their toes into crypto.