Digital asset custodian BitGo has revealed its intention to acquire fintech infrastructure provider Prime Trust, as per an announcement made on June 8. The non-binding letter of intent sets the stage for BitGo’s acquisition of Prime Trust’s payment rails and cryptocurrency IRA fund, which will enhance BitGo’s wealth management offerings. However, specific details regarding the agreement’s terms were not disclosed.
BitGO plans to expand its services
As part of the deal, BitGo plans to integrate Prime Trust’s Nevada Trust Company into its network of regulated trust companies located in South Dakota, New York, Germany, and Switzerland. Additionally, Prime Trust’s API infrastructure and exchange network will be seamlessly integrated with BitGo services, maintaining a 1:1 mapping. BitGo aims to position itself as the first global digital asset company to offer a comprehensive suite of solutions for institutions and fintech platforms through this acquisition, as stated in the announcement.
The crypto custody market is witnessing rapid evolution, exemplified by Ripple’s acquisition of Swiss digital asset custody provider Metaco for $250 million in May. Technological advancements are also reshaping the industry landscape, further intensifying the competition.
The timing of this acquisition is noteworthy, considering recent regulatory developments proposed by the United States Securities and Exchange Commission (SEC). These proposed rule changes may impose greater challenges for crypto companies acting as custodians of their customers’ funds, potentially impacting the industry’s operational dynamics.
The regulatory environment in the crypto sector is a major concern
Prime Trust faced its share of challenges earlier this year when it reportedly downsized its workforce by one-third in January. The company later became involved in holding Binance.US customer funds through a network of partner banks after a banking crisis in March, emphasizing its role in supporting the crypto ecosystem.
It is worth mentioning that Prime Trust was embroiled in a controversy in Oregon last year. It was revealed as the source of a $500,000 contribution to the state Democratic Party, which was subsequently discovered to have originated from FTX executive Nishad Singh.
BitGo itself faced a potential acquisition by Galaxy Digital for $1.2 billion last year but took legal action against Galaxy after the deal was canceled, leading to an uncertain outcome.
The acquisition of Prime Trust by BitGo represents a strategic move aimed at expanding BitGo’s wealth management offerings and consolidating its position as a leading digital asset company. As regulatory requirements evolve and the crypto custody market continues to develop, industry players like BitGo seek to adapt and strengthen their capabilities to meet the needs of institutional clients and fintech platforms.
