Galaxy Digital Expands Staking Services Through BitGo Partnership

According to CoinDesk, Galaxy Digital, led by Mike Novogratz, is extending its blockchain staking services to BitGo Trust, a regulated custody specialist, despite ongoing legal disputes between the two companies. This collaboration allows Galaxy's staking and validator services, which manage over $4 billion in staked crypto assets, to be accessible to BitGo's institutional clients. This enables investors to earn staking rewards while using their assets as collateral for loans and trading on Galaxy's platform. In early 2023, Galaxy withdrew from a deal to acquire BitGo, prompting BitGo to file a $100 million lawsuit, accusing Galaxy of breaching their May 2021 merger agreement. Despite this legal conflict, both firms issued a joint statement expressing their commitment to strategic collaboration and the potential to drive digital asset adoption, viewing the legal proceedings as a separate issue. Staking, which involves locking up crypto tokens to support blockchain operations in exchange for rewards, is a crucial aspect of the cryptocurrency ecosystem. Under U.S. President Donald Trump's pro-crypto administration, there are indications that staking will gain further prominence in the United States. Galaxy has been enhancing its non-custodial staking infrastructure, acquiring blockchain node operator CryptoManufaktur (CMF) in July of the previous year. Being included in BitGo's list of staking providers signifies full integration with secure custodial services, offering a comprehensive solution, according to Zane Glauber, head of Galaxy's Blockchain Infrastructure team. Glauber highlighted that Galaxy's unique offering lies in the enhanced products available to customers with assets in a custodial relationship. With appropriate documentation, these assets can be used as collateral within Galaxy's trading environment, allowing them to be utilized for borrowing cash or engaging in derivative strategies while also earning staking rewards. The emergence of a crypto-friendly U.S. government raises the prospect of staking being incorporated into exchange-traded funds (ETFs) for proof-of-stake tokens like Ethereum's ether (ETH). Glauber noted that if staking is included in ETF products, fund managers must carefully consider liquidity risk. Staking involves locking assets for a set period, and in Ethereum, un-bonding queues can vary based on supply, demand, and on-chain dynamics. Financial products can help mitigate these issues by providing liquidity through access to collateral product suites.