With Galaxy Digital’s acquisition of BitGo, we are seeing the continued institutional investment into not only crypto but into the infrastructure through which this new age of finance will run. BitGo is a “digital asset trust company and security company, headquartered in Palo Alto, California” (BitGo.com). For those unfamiliar with what a “digital asset trust” and “security company” is, the company acts as a trusted third party through which asset holders delegate the responsibility of asset security to a company that specializes in it. Many of these companies, such as banks, have existed for centuries but with the advent of cryptocurrencies, a new asset class, companies such as BitGo have filled the gap as conventional banks have been late to the game.
Galaxy Digital’s acquisition of BitGo and past acquisitions of DrawBridge Lending and Blue Fire Capital, has led Laura Vidiella, VP of institutional sales at Paradigm, to claim that “They are gonna be the next bank together with Genesis and other players”. A claim that would likely have many conventional banking dinosaurs shaking in their boots! All jokes aside, how do these acquisitions play into Galaxy Digital’s hopes of becoming, as Laura puts it, “the next bank”.
Back in November Galaxy Digital purchased both DrawBridge Lending, “an innovator in digital asset lending, borrowing, and structured products”, and Blue Fire Capital, “a proprietary trading firm specializing in market-making and two-sided liquidity for digital assets” (PR NewsWire). This is what Laura refers to as “inorganic growth (acquiring another business)” and although it may allow the company to grow at an accelerated rate, it can come with obstacles of merging two, or in this case four, separate companies with different cultures. Nonetheless, these company purchases by Galaxy Digital show their ambitions to provide the broader services of lending, borrowing, market making, and now asset trust, in the crypto space to both retail and institutional investors. However, with companies such as Genesis with similar ambitions the race for superiority is far from over.
The services previously mentioned just happen to be the traditional banks’ bread and butter as it pertains to the dominant fiat markets. However, the only issue for them
Is that with every passing day the world becomes more digital! First it was retail with ecommerce, then it was community with social media, and now finance with decentralized applications.
If we are indeed in the midst of a massive shift in the banking paradigm, Galaxy Digital has positioned themselves well to be industry leaders in this new age of financial freedom.