BitGo to acquire NYDIG’s institutional trading business as crypto trading rebounds

Key Points

The crypto infrastructure firm BitGo has agreed to buy the institutional trading business and related assets of NYDIG, CNBC has learned. With the acquisition, BitGo will add derivatives, structured products, financing and other capital markets services to its existing custody, settlement and wallet infrastructure businesses. An expected 30 employees from NYDIG and 250 institutional client relationships will join BitGo, according to a person close to the matter. Terms of the deal weren't immediately available. BitGo has a small public market profile — it went public at the start of the year, is based in Sioux Falls, South Dakota and has a market value today of less than $1 billion — but the company has longstanding credibility in the crypto industry. Founded in 2013, BitGo is one of the earliest players in institutional crypto custody and infrastructure, with a strong reputation for security and serving major institutions. The custody provider is expanding its institutional and capital markets capabilities just as crypto markets emerge from a prolonged trading slowdown. The deal is one of the first signs of a broader rebound in crypto trading. Bitcoin has risen more than 20% over the past week, briefly topping $80,000 on Tuesday, after several months of weak trading volume and lackluster investor participation. The BitGo expansion also offers a glimpse into how crypto companies are preparing for a continued recovery after the latest bout of "crypto winter," and highlights how the industry is shifting away from crypto as an asset class and instead toward a focus on crypto-based infrastructure serving institutions. NYDIG's institutional trading business serves asset managers, hedge funds, corporations, family offices and other institutional investors, with a focus on derivatives, financing and customized trading strategies. Tune in this Friday at 6:50 a.m. ET to watch BitGo CEO Mike Belshe live on CNBC's "Squawk Box."