Crypto Custody Wars
Whoever says crypto custody is too crowded hasn’t been paying enough attention. In the last 18 months there have been eight different outright acquisitions in the crypto custody space and almost every time multiple bidders have been involved.
The fact is, everyone wants to own custody. And as traditional banks and investment managers transition into the space we’ll likely see more news of acquisitions.
Crypto Custody Acquisitions Last 18 Months
1. Curv Acquired by PayPal, March 2021
Curv was acquired by PayPal for reportedly almost $200M in 2021, making it PayPal’s largest acquisition in this space. Much to the annoyance of Curv’s customer base, PayPal quickly shuttered the service to third parties wanting their crypto custody solution to only be used in-house.
2. BitGo Acquired by Galaxy Digital, May 2021
BitGo is being acquired by Galaxy Digital for 44.8 million in newly issued shares and $265 million in cash, implying an aggregate transaction value of approximately $1,158 million. Whilst the deal was first announced in May 2021, the teams have since been revised to reflect the growth of BitGo in the interim. Now the deal is expected to close around Q4 2022.
3. ShardX Acquired by Gemini, June 2021
London-based ShardX, a startup that develops MPC enabled Hardware Security Modules was acquired by Gemini for an unknown amount. Gemini announced plans to integrate their MPC technology into its custody service to enable them to meet the demand for fast withdrawals.
4. Unbound Acquired by Coinbase, November 2021
At the end of last year Coinbase announced that it would be acquiring Israeli startup Unbound Security. Unbound is known for its expertise in secure multi-party computation (MPC). Coinbase didn’t disclose the acquisition price, but Unbound had raised a total of $35M up until its acquisition, so it's safe to assume the price was in the hundreds of millions.
5. GK8 Acquired by Celsius, November 2021
GK8, a cybersecurity company that offers a high-security custodian technology for managing and safeguarding digital assets was acquired by Celsius for $115M. GK8 had raised just $10M prior to its acquisition.
6. Trustology Acquired by BitPanda, February 2022
Trustology was acquired by BitPanda at the start of 2022 for an undisclosed amount, making it the first ever acquisition for BitPanda which was valued at $4.1B in its last venture round.
7. Cybavo Acquired by Circle, June 2022
Cybavo is being acquired by Circle for yet another undisclosed amount. Circle announced that the deal would allow it to offer "infrastructure as a service" for companies looking to build on Web 3.
8. Sepior Acquired by Blockdaemon, July 2022
Sepior just announced that it’s being acquired by Blockdaemon for an undisclosed sum, continuing a spree of acquisitions by the crypto infrastructure provider.
It’s not just acquisitions! Despite the bear market, banks and traditional asset managers are launching crypto services and investing in established crypto players at unprecedented rates.
TradFi Entering DeFi Will Create Exponential Demand For Crypto Custody Services
In just the last couple of weeks:
- BlackRock announced that it would start offering crypto to its institutional clients via Coinbase;
- BNP Paribas partnered with Metaco to offer its clients digital asset custody; and
- Goldman Sachs looked to acquire assets from embattled CeFi lender Celsius.
What’s more exciting to me is what happens when we start to see real assets move on chain. As incumbents anticipate the shift of traditional stocks and bonds off of legacy architecture we’ll see more demand boom for digital asset custody and related infrastructure.