Good day and welcome to the Galaxy Digital Investors Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Galaxy Digital Investor Relations. Please go ahead.
Go ahead.
Good morning and welcome to Galaxy Digital's announcement call for the acquisition of BitGo. Before we begin, please note that our remarks today may include forward-looking statements. Actual results may differ materially from those indicated or implied by our forward-looking statements as a result of various factors, including those identified in our filings with the Canadian Securities Administrators on CEDAR and available on our website or in future filings we make with other securities regulators. Forward-looking statements speak only as of today and will not be updated. In addition, none of the information on this call constitutes a recommendation, solicitation, or offer by Galaxy Digital or its affiliates to buy or sell any securities, including Galaxy Digital Securities. With that, I'll now turn it over to Mike Novogratz, Founder, CEO, and Chairman of Galaxy Digital.
Well, good morning, everyone. I'm excited to be here today. It's a spectacular New York day. Even though it's foggy, it's spectacular, mostly because of our announcement. In early this morning, we announced that Galaxy Digital has agreed to acquire BitGo. This will be a first-of-its-kind deal that positions Galaxy as a true one-stop shop in digital assets and financial services. At close, this deal makes Galaxy a truly full-service global platform for institutions seeking access to the crypto economy, with an unparalleled breadth of products and services offered at scale to our clients. I'm joined on the call today by Galaxy's Co-Presidents, Damien Vanderwilt, and Chris Ferraro, and BitGo's CEO, Mike Belshe. We look forward to walking you through how we think about this game-changing acquisition. Turning to slide four, I want to remind everyone why I started Galaxy Digital and why I'm so excited about this acquisition.
Our mission is to institutionalize digital asset ecosystems and blockchain technology. That's our North Star, and we've designed a strategy to serve that mission by acting as the bridge between crypto and institutional worlds. Turning to the next slide, in order to execute on that mission and strategy, we built Galaxy as an ecosystem to drive long-term growth through five business lines. Galaxy is a high-growth, technology-driven, diversified financial services and investment management innovator, providing our clients with a full suite of scaled institutional quality financial solutions.
As we lay it out, you can see some of the remarkable achievements we've had in the short history of our company, whether it's growing our assets under management to over $1.3 billion, scaling the trading business to make markets in over 60 coins, directly investing in some of the most exciting startups, or attracting really strong talent to execute on our long-term goals. We also apply a compliance-first mindset to everything we do, harnessing our team's expertise developed at the best-in-class financial and technology companies globally. Our five business lines complement and reinforce each other with four client-centric offerings serving a variety of investor and corporate needs as they increasingly inhabit the digital asset world. We also directly invest in the space through our principal investment segment, where our venture teams evaluate thousands of opportunities across the digital assets ecosystem. And we've had a long track record of innovation.
I've been investing in cryptocurrency for almost 10 years now and built Galaxy as I started to see a paradigm shift in the industry, leading to a public listing in 2018 and our uplist from the TSX Venture to the TSX last year. While I've been a crypto evangelist for quite some time now, I can say with full confidence this is now a completely different market than when I bought my first Bitcoin 10 years ago. Turning the slide, the caliber of institutions and individuals in the space now has dramatically given them when we started. I can isolate for you numerous secular tailwinds propelling our industry, starting with investment growth in the space. Money, including through Galaxy's two separate VC funds, is pouring into companies that are changing the landscape across several sectors.
Institutions and large corporations are beginning to view cryptocurrencies as inflation hedges and stores of value. The regulatory landscape is evolving, and compliance best practices are beginning to develop. There are some significant adoption milestones in just the past few months alone, most notably the successful Coinbase U.S. listing. Turning to slide seven, we're executing against the still unbound opportunity of this sector. We know there's an expectation that adoption will ramp up soon. A recent Fidelity Digital Assets Survey showed 91% of institutional investors that are expecting to add digital assets and will do so by 2025. That would be about triple where we are today. Building on the undercurrent of increasing demand, we believe the knowable and serviceable TAM to be significant. Most immediately, there are over 170 billion of daily crypto trading volumes for us to address.
There are sizable opportunities in other digital asset infrastructure-related areas like Prime or custody servicing. For what it's worth, this is just what we see today as on the horizon with businesses we currently have before considering long-term opportunities in areas like applications of NFTs and broader tokenization. We believe we're still in early innings of this industry, with people now buying into concepts like Bitcoin as digital gold and Ethereum as a basis for DeFi. Longer term, though, the ecosystem has unbound upside as it takes on the size, distribution, and impact of broader currencies and commodities and even becomes part of the infrastructure for global trade and commerce. All in all, this is a rapidly growing attractive market for Galaxy to be in.
But as our clients and Wall Street CEOs tell me every day, the market is still nascent, and the infrastructure institutional investor demand isn't widely offered. I'll let our Co-President and Head of Global Markets explain that dynamic. To sum it up, I want to reiterate my belief that the power of technology solutions and people we will have as a result of this acquisition will unlock unique value for our clients and our shareholders and drive long-term growth for our combined businesses. I'd also like to express how excited I am to welcome Mike Belshe and the talented BitGo team to the Galaxy family. With that, I'll pass to Damien.
Thank you, Mike. Thank you for laying the groundwork on the market opportunity that we all have the opportunity to execute against today.
Even with the adoption milestones we've seen in crypto as of late, it's just not easy for institutions to find secure, qualified, and flexible custody servicing offerings. Filling that need is really key to enabling widespread adoption in this sector. One of the most frequent questions I keep getting from our clients is, "Where do I securely store my digital assets?" It's a first-order question, and until today, I've been directing them to our network of trusted custodial partners. Moreover, the market is asking for next-gen technology that can adequately handle sophisticated needs, but that's also tailor-made for crypto use cases. Enter BitGo. Once we close, our clients will have the option to custody where they transact, and Galaxy will own the entire client lifecycle of transacting and holding digital assets. Together, we'll also be more able to innovate and develop new solutions to meet the market where it's going.
Galaxy can be the catalyst and accelerator behind this, in Bitcoin, Ethereum, and across the entire sector. This is transformational for both Galaxy and BitGo's clients, as all current Galaxy clients and the over 400 net new BitGo institutional clients will have access to a one-stop infrastructure and financial services provider with critical institutional-grade security and functionalities. I'd like to share with you on page nine a little more about BitGo and what businesses and capabilities this acquisition adds to Galaxy. Adding BitGo establishes Galaxy as the preeminent one-stop digital asset shop for institutions. Beyond Galaxy's existing services in trading, investment banking, asset management, and mining, we'll now be able to offer our clients custody, Prime Brokerage, and portfolio and tax services. Secure and compliant custody is BitGo's bread and butter.
BitGo also pioneered customizable portfolio and tax solutions that enable institutions and high-net-worth individuals to track assets, whether or not they keep their wallet with us, explore customizable tax configurations, integrate with top-grade fund administrators, and automate report generation. On top of that, 50% or more of BitGo's revenue comes from international clients, including a significant group of clients in EMEA and APAC, furthering Galaxy's already global reach. Underpinning it all are BitGo's innovative, world-class engineers who specialize in blockchain infrastructure. Before I turn the call over to Mike Belshe, I want to reiterate a few points I made on our last earnings call.
I continue to have calls with clients and potential clients of Galaxy every day since I've joined Galaxy asking, "How do I get into crypto and how do I do it safely?" These calls are from the largest and smartest companies and investment managers in the world. These calls are no longer just about Bitcoin. Clients need advice across the entire sector. These clients are calling Galaxy because we are the go-to trusted experts for institutional access to this space, whether the client wants OTC products, completely bespoke structuring, or strategic advice, and post-close, I can tell clients they have the option now to custody where they transact. This is one item our clients have requested frequently. We think this could be the linchpin to mainstream digital assets for institutions.
All that being said, we'll continue to support all our current custodial relationships and allow clients to continue to custody with any onboarded and approved external custodians. I couldn't be more excited to be part of the Galaxy journey and our next leg of growth with the addition of BitGo. I'm now delighted to both welcome and turn over the call to Mike Belshe, BitGo's founder and CEO. Mike's going to walk you through BitGo's key business lines and capabilities.
Thank you, Damien. First, I want to thank Mike, Damien, Chris, for the warm welcome to the Galaxy family. I've known and admired the Galaxy team for years now. We've worked together directly since 2018 when Galaxy originally invested in BitGo, and I couldn't be more thrilled to be joining at such an exciting time in Galaxy's history. Since I started BitGo in 2013, we've been a pioneer in developing leading custody and wallet infrastructure products, financial products, including Prime lending, trading, and portfolio management, as well as tax solutions that mitigate and optimize capital efficiency. We are the first independent regulated custodian, purpose-built for digital assets, and the only scaled crypto infrastructure company that has been focused exclusively on serving institutional clients. Today, we're the leading custody provider with over $40 billion in assets under custody, serving 150 exchanges and over 400 institutional clients worldwide.
BitGo processes over $30 billion of monthly transactions, supports more than 400 coins and tokens, and provides clients with the most comprehensive insurance available in the market. We are also the third-largest stablecoin provider with WBTC. We serve customers in over 50 different countries and are trusted by some of the largest and most important cryptocurrency players and major financial institutions in the space, and I'd like to spend some time walking through some of the key capabilities that BitGo brings to market. I'll begin with custody, which is our core product. We are the world's most secure and compliant digital asset custody solution. We safeguard our clients' digital assets in qualified, insured cold storage custody all through our regulated trusts with licenses in both New York and South Dakota. Cold storage assets are held in segregated accounts. They are insured and secured by the strongest technology in the industry.
We also offer wallet capabilities, which provide clients the ideal balancing between security and accessibility. Our clients can move assets seamlessly and reliably, protected by BitGo's pioneering multi-signature technology, multi-user policy controls, and advanced security configurations. Our custody and wallet solutions are purpose-built for institutions demanding the highest level of security and compliance for their digital assets. Turning to Prime Brokerage, which is a great complement to Galaxy's existing trading business, our Prime solution combines access to liquidity with best-in-class security while connecting to multiple liquidity venues and allowing clients to trade directly and anonymously from the safety of insured cold storage. Also rounding out our product suite is our portfolio management and tax solutions, where our clients can view and manage their entire digital asset portfolio across top exchanges, blockchain wallets, and service providers as we calculate cost basis, realized gains, losses, and tax loss.
Behind all our products is the most secure infrastructure available in the market. We offer clients the most comprehensive insurance coverage in the industry with the foremost security standards in place for both hot and cold storage. BitGo Trust is regularly audited and required to meet rigorous standards for capitalization, anti-money laundering procedures, confidentiality, reporting, and storage. In our full platform, our solutions are built with compliance, cybersecurity, and monitoring core with an eye towards the unique and sophisticated institutional customer. But before I turn the call over to Chris to share the details of the transaction, I want to echo Mike and Damien's excitement about the opportunity Galaxy is executing against.
Joining Galaxy Digital represents an exciting new chapter for our company as our current clients gain access to a wide set of financial solutions, and we will now be positioned to offer our best-in-class digital asset infrastructure capabilities to significantly more corporate, institutional, and high-net-worth investor clients. On behalf of my leadership team and the over 125 BitGo employees across the world, I want to share how thrilled we are to join the Galaxy team and further our shared mission to institutionalize digital asset ecosystems and blockchain technology. Chris?
Thanks, Mike. And we're thrilled to have you joining us. Before I share the details of the transaction, I want to highlight what we believe sets BitGo apart from the rest of the industry. And we think that it is equally about BitGo's DNA as it is their technical and product capabilities. First, BitGo is the only insured qualified independent custodian. Moreover, they are the only provider offering institutional-grade, multi-venue trading, and a robust portfolio management tax solution. They were pioneers in the creation and commercialization of multi-sig non-custodial blockchain wallet technology. They have become early leaders in emerging cross-chain asset facilitation, having introduced Wrapped Bitcoin to the Ethereum market in 2019 and to the Tron blockchain earlier this year. And last but not least, BitGo, like Galaxy, prides itself on having a technology-meets-Wall Street background.
Mike Belshe comes from a long and successful career in the technology world and has been able to assemble world-class blockchain product and engineering teams into BitGo. Moreover, Mike has also made sure to fill his leadership ranks with top talent from premier Wall Street firms in order to best serve the rigorous demands of global financial institutions, and it's this combination of high-quality product and technical talent with seasoned financial institutional DNA that makes us so excited about the fit with the existing Galaxy team. I'd now like to walk you through some of the specifics of the deal. First off, to reiterate, this deal solidifies Galaxy's position as a leading global financial services provider for institutions accessing digital assets. BitGo adds wallet and custody, portfolio management, and tax tools that service clients beyond just the point of transaction.
It also adds the ability for our clients to custody where they trade. Adding 40+ billion of AUC immediately establishes the combined company as a leader in both transactional security products as well as storage solutions. Moreover, BitGo's Prime and trading offerings will further support our efforts to scale our own offerings in these areas, and BitGo's approximately 50% of revenues from non-U.S. clients immediately expands our global reach. Second, onto our combined client base, which supports Galaxy's robust long-term growth through cross-selling opportunities. BitGo adds 400+ net new accounts to Galaxy on day one, representing a significant opportunity to cross-sell wider Galaxy offerings to BitGo clients and of equal importance to sell BitGo products into Galaxy's existing client base. This transaction solves a frequent friction point for Galaxy clients, providing a scaled, reliable custody product that doesn't require these clients to look outside of our doors.
And we're adding over 10 experienced sales leaders to our institutional sales team. Third, this deal diversifies Galaxy's business with the addition of revenue streams that are significantly less correlated with digital asset prices. About 75% of BitGo's revenue is recurring in nature and augments the current Galaxy trading business with tools like tax and portfolio management as we jointly work towards building a best-in-class single dealer platform for institutional digital asset participation. Lastly, adding BitGo enhances both our product innovation and development capabilities. After this deal closes, we'll have a staff that's balanced between tech and finance expertise as about 50% of BitGo is R&D engineering personnel. Mike Belshe brings significant tech experience and credentials to the combined company, and we're adding a West Coast presence via BitGo's Palo Alto headquarters.
With the BitGo acquisition, we will now set the standard for serving institutions in the digital asset ecosystem, improving Galaxy's market position, capabilities, human capital, and geographic presence. The combination of BitGo's blockchain R&D talent with Galaxy's digital asset financial services expertise enables us to introduce new and more robust product to market faster with a differentiated degree of sophistication. Finally, turning to the details of the transaction, we are acquiring 100% of the outstanding shares of BitGo in a stock and cash deal. The implied valuation of this transaction is about $1.2 billion based on Galaxy's closing share price as of May 4, 2021, yesterday. The purchase price reflects the strength of BitGo's technology-focused recurring revenue base and strong growth prospects we see for our combined business.
The cash portion of the purchase price will be funded using Galaxy's balance sheet, and we will issue incremental stock to acquire BitGo's net digital assets. The transaction is expected to close in Q4 of 2021, subject to regulatory approvals of our own domestication to the U.S. by Galaxy shareholders and other customary closing conditions. Moreover, we will also be delighted to welcome Mike Belshe as Deputy CEO of Galaxy Digital and to the Galaxy Digital Board of Directors. To summarize, the acquisition of BitGo makes Galaxy an even stronger company. We can now deliver increased value to our clients with a comprehensive suite of solutions covering the entire digital asset ecosystem. Galaxy will also be stronger financially with a greater share of recurring revenues and a diversified global client base.
Lastly, but most importantly, this accelerates our ability to achieve our stated mission, to institutionalize digital asset ecosystems and blockchain technology. I'll now turn the call back to Novo for closing remarks.
Thanks, guys. So guys, in sum, we at Galaxy remain committed to being a one-stop shop for institutions seeking access to the crypto economy and look forward to continuing to provide our clients and industry-leading solutions for their ever-evolving needs. With the addition of Mike and the talented BitGo team, I've never been as bullish as I am today on Galaxy's prospects. We have the right team, the right strategy to take advantage of the massive opportunity in front of us. I want to thank my team at Galaxy for working tirelessly and around the clock to serve our clients and our industry. I want to do the same to the team at BitGo. Lastly, I'd like to thank you, our shareholders, for your support. I look forward to speaking to you again shortly on our May 17th Q1 earnings call. Thanks a lot and have a great day.
Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.