PayPal said to be in talks to buy crypto custodian BitGo

NEW YORK • PayPal Holdings is exploring acquisitions of cryptocurrency companies, including bitcoin custodian BitGo, according to people familiar with the matter, a move that would expand its embrace of digital coins.

PayPal has been holding talks with BitGo, a company that helps investors store bitcoin securely, and could reach a deal within weeks, the people said, asking not to be identified because the matter is private.

Talks could still fall apart and PayPal could opt to buy other targets, the people added.

It could not be learnt how much PayPal would pay for BitGo if it goes ahead with the deal. BitGo raised US$58.5 million (S$79.5 million) in 2018 at a US$170 million valuation, according to PitchBook.

Representatives for BitGo and PayPal declined to comment.

The Palo Alto, California-based BitGo, founded in 2013 by chief executive officer Mike Belshe, offers digital wallets that require multiple signatures for transactions, as well as offline vaults for storing bitcoin and rival currencies.

It was one of the first companies in the space to focus on institutional investors, according to its website.

The company applied in August to New York regulators to become an independent, regulated qualified custodian under New York State Banking Law, a press release showed. Custodians like BitGo are responsible for safekeeping digital assets using secure storage.

PayPal announced on Wednesday that its customers can buy, sell and hold cryptocurrencies - including bitcoin, ether, bitcoin cash and litecoin - from digital wallets, as well as use the virtual money to shop at the 26 million merchants on its network.

The announcement led bitcoin to surge past US$13,000 for the first time since July last year.

PayPal said it would partner with BitGo competitor Paxos Trust Company, a regulated provider of cryptocurrency products and services, for its new service.

BitGo is backed by investors including Goldman Sachs Group, Craft Ventures, Digital Currency Group, DRW, Galaxy Digital Ventures, Redpoint Ventures, Valor Equity Partners and Founders Fund.

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A version of this article appeared in the print edition of The Straits Times on October 24, 2020, with the headline 'PayPal said to be in talks to buy crypto custodian BitGo'. Print Edition | Subscribe