Galaxy Digital Partners with BitGo Trust for Enhanced Staking Services
Galaxy Digital (GLXY), the prominent cryptocurrency trading firm led by Mike Novogratz, is set to enhance its blockchain staking services through a new partnership with BitGo Trust, a firm specializing in regulated custody solutions. This collaboration comes despite an ongoing legal dispute between the two entities, showcasing a mutual interest in advancing the cryptocurrency ecosystem.
The strategic partnership allows Galaxy to extend its staking and validator services, which currently manage over $4 billion in staked crypto assets, to BitGo’s institutional clientele. This integration enables investors not only to earn rewards from staking but also to utilize their staked assets as collateral for loans and trading activities on Galaxy’s platform.
Earlier this year, Galaxy abandoned its plans to acquire BitGo, prompting BitGo to file a lawsuit for $100 million, claiming that Galaxy intentionally breached the merger agreement established in May 2021. In light of this legal battle, both companies released a joint statement emphasizing their commitment to collaboration:
“Galaxy and BitGo both see an incredible opportunity to further drive adoption of digital assets and remain committed to strategic collaboration despite ongoing legal proceedings, which are a separate matter.”
Staking plays a crucial role in the cryptocurrency landscape, involving the locking of crypto tokens to support blockchain operations in exchange for rewards. With the potential for a pro-crypto administration under President Donald Trump, there are indications that staking will gain further traction in the United States.
Galaxy has been actively developing its non-custodial staking infrastructure, highlighted by its acquisition of the blockchain node operator, CryptoManufaktur (CMF), in July of the previous year. Being added to BitGo’s roster of staking providers signifies a comprehensive integration with highly secure custodial services, offering an advantageous position for both firms.
According to Zane Glauber, head of Galaxy’s Blockchain Infrastructure team, “Galaxy’s key differentiator is the enhanced products that can be made available to customers whose assets are sitting in a custodial relationship.” He elaborated that, with minimal documentation, these assets can be utilized as collateral within Galaxy’s trading environment. This means that while assets are staked, they can simultaneously be leveraged to borrow cash or participate in various derivative strategies.
The current climate of a crypto-friendly U.S. government raises intriguing questions about the future of staking within exchange-traded funds (ETFs) that focus on underlying proof-of-stake tokens, such as Ethereum’s ether (ETH). Glauber noted that if staking becomes part of ETF offerings, fund managers must carefully assess liquidity risks. He stated, “Staking locks up your assets for a predetermined amount of time, particularly in Ethereum, where un-bonding queues can vary dynamically based on supply, demand, and on-chain factors.” He further emphasized that incorporating financial products can help mitigate some of these challenges by providing liquidity that is enabled through access to this collateral product suite.
