Genesis Capital, a New York-based cryptocurrency firm that caters to institutional investors, announced on Thursday that it has acquired London-based custodian Volt for an undisclosed sum.
The deal is significant because it paves the way for Genesis to become a premier brokerage, similar to Goldman Sachs in the traditional financial world, offering its clients a full suite of services, including encryption storage.
Custody is an unglamorous but important part of the crypto industry, in which hackers are constantly trying to steal digital assets like Bitcoin. Offering an escrow service also provides the opportunity to attract a broader range of institutional clients, many of whom must hold their assets with certified custodians.
Volt is not a big name in the world of crypto custody and only has six employees. But Genesis CEO Michael Moro told Fortune that he is impressed by the company’s technology and sees the acquisition as a strategic step.
My take on the escrow space is that it’s not a Private business. There’s a lot of competition and it’s a race to zero, Moro said, explaining that Genesis will treat escrow as a complementary service to offer alongside its products commercial and credit.
The Volt deal also coincides with a wave of consolidation in the crypto industry, where once niche companies like BitGo are also trying to position themselves as full-service companies, offering everything from loans to insurance.
The acquisition also heralds growing competition between Genesis and industry giant Coinbase, which came to dominate the custody space after acquiring Xapo’s storage business last year for $ 55 million.
A key component of the Xapo deal was that Coinbase took over the custodial needs of Grayscale, another cryptocurrency giant that reportedly owns more than 300,000 Bitcoins, currently worth around $ 10,000 each. Like Genesis, Grayscale is a subsidiary of crypto conglomerate Digital Currency Group, which means that the latter will likely transfer its treasure to its sister company.
Moro said he could not comment on Grayscale’s custody agreements, and said they are only governed by long-term contracts.
All of this offers further indications that the cryptocurrency industry is resembling the traditional financial industry, where a handful of big players are caught up in fierce rivalries.
