What kind of company is NYDIG, which created a record single financing of $1 billion in the cryptocurrency industry?

Author: Gu Yu, Chain Catcher

On November 14, Bitcoin institutional solution provider NYDIG (New York Digital Investment Group) announced that it completed a $1 billion equity financing at a valuation of $7 billion, making this financing the largest single financing amount in the history of the cryptocurrency industry. Previously, the record for a single financing in the crypto industry was $900 million raised by FTX in July.

This financing was led by WestCap, with participation from Bessemer Venture Partners, FinTech Collective, Affirm, FIS, Fiserv, MassMutual, Morgan Stanley, and New York Life, among others. The funds will be used to further develop NYDIG's institutional Bitcoin platform, utilizing the recently upgraded Bitcoin protocol, which features Bitcoin and Lightning payments, asset tokenization, and smart contracts.

So, why has NYDIG been able to attract so many traditional financial giants and secure a massive $1 billion financing? What kind of crypto company is this?

According to official information, NYDIG positions itself as a gateway to a new era of financial products, making it easier for everyone to access Bitcoin and powering a more inclusive economic system. It obtained a BitLicense in New York in 2018. Specifically, NYDIG is a company that provides comprehensive, institutional-grade solutions focused on Bitcoin for traditional financial companies, including purchasing, custody, and trading Bitcoin.

In other words, almost all of the company's business revolves around compliant Bitcoin solutions, with Ethereum, Litecoin, and other crypto assets rarely mentioned in official materials.

"NYDIG plays a unique role in the industry, enabling all types of companies to integrate Bitcoin in a secure and compliant manner. They have opened new avenues for accessibility and further accelerated Bitcoin adoption," said Scott Ganeles, partner at WestCap, the lead investor in this round of financing.

In recent years, NYDIG has helped several well-known institutions execute Bitcoin purchase transactions, such as assisting the Houston Firefighters' Pension Fund in purchasing $25 million worth of Bitcoin and Ethereum in October this year, helping Marathon Patent Group acquire approximately $150 million in Bitcoin in January, and assisting insurance giant MassMutual in purchasing about $100 million in Bitcoin last December.

Additionally, NYDIG offers clients a variety of products, including Bitcoin custody, Bitcoin strategy funds, Bitcoin-backed lending, and structured solutions, all built on a single platform that integrates execution, custody, anti-money laundering, and KYC protections. In June of this year, the company's two Bitcoin funds reached a management scale of $340 million, with total assets under custody exceeding $1 billion.

NYDIG has also made several acquisitions this year to enhance its solutions. In November, the company acquired the Bitcoin Lightning Network payment application Bottlepay to integrate it into its existing full-stack Bitcoin platform; in September, it acquired order management software Etale to improve its Bitcoin trading execution tools; and in April, it acquired Bitcoin mining service company Arctos to provide a series of solutions for Bitcoin miners, including equipment procurement and financing, custody, derivatives, and hedging.

At the same time, NYDIG also offers its full suite of Bitcoin-based solutions to third parties, including Bitcoin accounts, Bitcoin payroll, user loyalty programs, and Bitcoin donations, helping third-party institutions attract more users interested in Bitcoin. Many traditional financial institutions, such as MassMutual's brokerage firm MMLIS, STAR Bank, Q2 Digital Banking, and MVB Bank, have already partnered with the company.

NYDIG's Chief Innovation Officer Patrick Sells stated that by 2022, approximately 1,000 banks, credit unions, fintech companies, and retailers are expected to offer crypto-related products through the company.

NYDIG's official announcement of a series of partnerships

On the team side, NYDIG was founded by Ross Stevens, the founder of asset management company Stone Ridge. The board includes Ted Mathas, Chairman of New York Life, and David B. Heller, former co-head of Goldman Sachs Securities, among others. The head of regulatory affairs is Ben Lawsky, former head of the New York State Department of Financial Services and creator of the BitLicense. Former Goldman Sachs partner and former Alibaba president Ronnie Wexler and former Goldman Sachs partner Tejas Shah also joined the company in September this year, serving as Global Head of Business Development and Global Head of Trading, respectively. John Dalby, former CFO of Bridgewater Associates, took on the role of CFO at the company in May this year.

Overall, NYDIG provides compliant full-stack Bitcoin solutions to the traditional market, aiming to lower the barriers for traditional institutions to enter the Bitcoin market, and has become a major partner for many financial institutions supporting Bitcoin trading and custody.