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BFD Expert Voices - Private Credit

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Crypto custody company BitGo has acquired Brassica, an alternative investing infrastructure company, Axios has learned.

Why it matters: BitGo will now expand beyond the crypto assets into tokenizing private assets.

How it works: Serving RIAs and other institutional investors, Brassica is an SEC-registered transfer agent — allowing it to manage private security issuance, create securities offerings, and pay out investor distributions through its platform.

BitGo, though a custodian, did not previously hold such a license.

Brassica had plans to enter the crypto space but had largely focused on private alternatives.

"We know that someday, you're going to call your broker and you might want Bitcoin or you might want equities — and you're going to expect a single vendor to be able to provide that for you," says BitGo CEO Mike Belshe. "We have a lot of interest from our institutional clients around how to get to the tokenization of real-world assets."

Between the lines: Brassica is largely a subscription-based model, giving BitGo an additional line of revenue.

The crypto custodian earns most of its topline revenue from transactions and from assets under custody.

Context: Sources with knowledge of the matter tell Axios that the deal was completed in BitGo stock, with Brassica investors (which includes Republic, Valor Equity Partners, and Long Journey Ventures) getting shares.

Brassica has raised about $12 million since its 2021 founding.

Of note: In asset tokenization and securitization, the lines between traditional finance and crypto have been successfully, if tentatively, blurring, even as many back away from straight-out crypto trading.

The Depository Trust and Clearing Corp. notably acquired Securrency for $50 million last autumn, a deal expected to help with asset tokenization efforts.

In a similar vein, Fireblocks acquired smart contract firm BlockFold for $10 million last year.

Traditional finance players including Hamilton Lane, KKR, Citi, JPMorgan and Apollo have been testing the technology.

Zooming out: BitGo is weighing more acquisitions after raising $100 million last year at a $1.75 billion valuation, says Belshe.

The firm acquired HeightZero in October and had planned to buy custodian PrimeTrust, but that deal was canceled.

The intrigue: Just two years ago, BitGo was an acquisition target itself, with Galaxy Digital agreeing to buy the company for $1.2 billion. Galaxy later alleged that BitGo had failed to submit an audited financial statement in a timely manner, and it scrapped the deal.

Belshe ascribes the issue to the SEC crypto accounting rule now being questioned by some House lawmakers.

BitGo has continued to seek $100 million for the breakup even after the lawsuit's dismissal in a Delaware Chancery Court, and it's fighting the case at the Delaware Supreme Court.

Exclusive: Crypto custodian BitGo buys Brassica

This deal comes as the buyer sorts out the failed Galaxy deal.

Illustration of pixelated coins inside of a treasure chest. 

Fintech

Crypto custody company BitGo has acquired Brassica, an alternative investing infrastructure company, Axios has learned.Why it matters: BitGo will now expand beyond the crypto assets into tokenizing private assets.

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Exclusive: Crypto custodian BitGo buys Brassica

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