All right, welcome back, everybody. We are continuing here at our sixth annual Canaccord Digital Assets Symposium. Once again, I'm Joseph Vafi, Equity Research Analyst here, focused on digital assets and the broader fintech space. Next up, we're pleased to have with us Mike Belshe, who's the Chairman and CEO of BitGo. We view BitGo as a key player on the infrastructure side of the broader crypto financial services ecosystem. With deep roots in technology and some of the most secure wallet and custody solutions in the market, BitGo has now evolved into offering a full suite of prime brokerage solutions for institutions, including custody trading, lending, and staking. At the same time, the company is building out a nice suite of crypto infrastructure solutions aimed at financial services and enterprises. These as-a-service offerings include stablecoins and broader crypto solutions, including large libraries of APIs to get things going quickly. We like the defensive and recurring nature of much of the company's business, while at the same time seeing custody as a strategic jumping-off point to provide a broader suite of value-added solutions to clients. The company recently completed its initial public offering and trades under the ticker BTGO. With that not-so-quick intro, thanks for being with us here today, Mike. Joseph, thank you for having me. Great. Maybe we just begin for the benefit of those investors that may not be yet familiar with BitGo. Could you describe the company in your own words and where it fits into the digital assets ecosystem today? Sure. Well, thank you for the nice introduction. We call ourselves an infrastructure company for digital assets. Actually, to be honest, infrastructure all of a sudden seems like a word everybody's claiming in crypto. Actually I really do think that we kinda started this space. We started very early on just trying to solve the simple problem of, you know, how do you make sure that you don't get hacked in your wallet? Back in 2013, sort of in the early wave, you know, at that time, people were losing their money individually. They would, you know, forget their password, put on hard disks, and that went into trash bins. You probably heard that. All kinds of things where they would lose on their own, or they would go to put it on some service, and that thing would get hacked or they would get rug pulled, et cetera. We pioneered this thing called, you know, two out of three multi-sig for Bitcoin. Initially it was just Bitcoin. Today, it's more than multi-signature protocols. It's also MPC protocols. It's threshold protocols, a whole bunch of cryptography layers on top of that with policy engines and things like that. The folks that were gravitating to that from the very early days were looking for infrastructure for their own businesses. Really all the way back, 2014, 2015, we're building fully API programmatic access to these wallets, and then those are being picked up by exchanges and broker-dealers and payment processors all over the planet. That's what set us off on our path. Around 2016, we had this client called CME Group. You might have heard of them. We were not doing any financial services at the time. We couldn't hold the keys. We weren't licensed. We were a technology company. But they really didn't wanna hold the keys. It was new to them. You know, they ended up doing it 'cause they didn't have a choice. There was literally nobody on the market that fit kind of the how do you hold this from a regulated safety perspective. We set out to build the first digital asset trust company, which we did. That was originally in Sioux Falls. That today has grown into kind of the foundation. Starting with that secure wallet infrastructure, overlaying that with the secure regulated custody, and then from there we build. Now, the custodians that we operate today, there's actually seven around the world. It's a pretty heavy footprint. We've got two in the U.S. We got Switzerland, BaFin regulated in Germany, VARA regulated in Dubai, MAS regulated in Singapore. We got South Korea coming in just a month or so here. We recently upgraded that charter to an OCC federal bank. It's a 100% reserve bank. It's hitting all the same criteria that you would hit, if you were any other type of national bank, regulated by the OCC. To be honest, we converted that very quickly, and we didn't really have to change much of what we were doing. Having already built this, you know, seven custodial footprint around the globe, we were already meeting the requirements that were necessary to run at the federal level. All right. From there, we've now been building out basically market structure on which our infrastructure runs. You've probably heard there's a market structure bill, Clarity Act, and it's not done yet. In general, there is no market structure for digital assets that's legislated or regulatory required today. The types of things that our clients wanted to do, being institutional type clients, having, like, often a fiduciary duty to their own clients, led us down this path where we had to do market structure kind of on our own. I'll give you a very quick, simple example. You know, being a custodian in digital assets without market structure, it makes you an island, right? If you were in any other asset class, you would be a part of a fabric that would connect exchanges and broker-dealers and banks and settlement parties, et cetera. In crypto, everybody was building vertically. If you wanted to have liquidity, you had to take it out of our secure cold storage custody and put it somewhere else. People didn't like that. You had to trade off. Like, do I want security or do I want liquidity? Market structure actually solves the problem that you can have both of these. You can have choice. You can actually have brokers you go to. Long story short, as of today, we're an infrastructure provider. I think if you wanted to give a mental analogy to what we do, we're more like a broker than the exchanges in crypto are. We're more like a broker because we do things like, A, make sure that you get access to all venues. We make sure that when you trade with us, you're getting the best price, best execution everywhere. That's again a piece of market structure that we built commercially rather than legislated or regulatory-wise. That's BitGo in a long-winded nutshell. That's great. No, there's a lot to unpack there for sure, Mike. Maybe just for those that don't know or don't understand the custody technology you bring to bear, I think it's pretty differentiated. You wanna just drill down on some of your, you know, custody solutions, including, like, real physical vaults all around the world and the like, that I think is differentiated in the market today. Thank you. Well, we think so. We've been doing it, I think, you know, longer than anybody. First off, a little about my background. I come from a technologist background. I'm based out here in Silicon Valley. Don't hold that against me, please. You know, started with not wanting to be in financial services, and so the way that we approached digital assets and security very much came from a digital security perspective. I've done a lot of that in a number of other walks of life, you know, prior to getting into crypto at all. Interestingly, in spite of the fact that we now have the best form of money we've ever had as humans, and that is Bitcoin, the way you take care of large amounts of Bitcoin and you secure it is you take it off the internet. It's a little bit dissatisfying, but you put it into cold storage. What that means, cold storage, means it's physically off the internet. We live in a day and age of massive hacks happening all the time. Nation-states power and fund these very successfully. You've heard about it pretty much every week for the last, you know, five years. On top of that, we've got AI hackers that are coming. When the assets are online, it is just really hard to keep them secure. This is not unique to crypto, right? I mean, we've seen financial institutions of all types that have been hacked. You know, it's pretty much a monthly, weekly occurrence. Anyway, we start with cold storage. The keys are physically offline. Then that two out of three multi-sig buzzword that I gave you a moment ago is really a model that protects against two key security elements, theft and loss. First off, theft is what you're worried about. You're always worried of getting hacked. There's no single point of failure. There's multiple sites that have keys. Finding a single key in our system is never going to get you access to the money. The second thing is, you know, people are and humans are fallible, and we do tend to lose things over time. If our clients ever lose a piece, there's always a backup, so protects against both of those two things. In terms of the cold storage, just to give you a visual of it's a combination of virtual security, that's software, and then hardware, physical security. That physical is Class 3 bank-grade vaults, which is a fancy way of saying the maximum-rated highest break-in time vault. It's 1.5 feet thick of concrete and steel. It's a safe deposit box type of system. It's got a big safe deposit box, huge door on it. It's got a minimum break-in time of 24 hours. When you get in there, you'll find a series of sub-vaults. Half of them are decoys. Inside some of those sub-vaults, each of which have their own break-in time, you'll find a little electronic key material. You'll find some electronic computers. It's completely offline, segregated away from the internet. Each one of those is encoded with its own password. People have those passwords. The people and the passwords are not in the vault. If you do manage to infiltrate all of this, assemble it, get a key together, and then sign a transaction, you have to go 1,000 miles away and do it again. The keys are all kept at least 1,000 miles away. Our insurance underwriters love that concept, and our clients like knowing that as well. That's kind of a little visual of what we do. One last thing. I just wanna make sure, like, the challenge of our business is people wanna lump us in as a custodian. Although I just described custody, remember custody in traditional finance is a 100-plus-year-old business. It's very mature. It's very well understood. By the way, it's not bearer instruments, where if you just take them, you now own them and can liquidate them in Russia. When we got into digital assets, we had to figure out, how are you gonna build financial services, without having really rock-solid foundation? We are building that rock-solid foundation. It didn't exist. We've been doing it longer than anybody at 12 years plus at this point. We had to build that in order to go to the next level, and then of course it's that financial services infrastructure, which is what we're really about, on the go-forward. That's great. I'm waiting for that site visit to some of those vaults where we can do some role-playing and see how good a bunch of analysts can hack those vaults. Waiting on that one, Mike. It's not open for public tour. Sorry, Joe. Fair enough. Yes. Because you have all of this security, customer assets are insured, right? They are. Actually, we led getting, you know, insurance in the industry. I think we got our first insurance back. It It was a very large $10 million policy way back then. Now today it's a $250 million shared policy, but on top of that, I think we have the largest underwritten policy of any crypto, and that is, our clients buy additional insurance on top of that. It covers up to about $700 million as of right now. That might sound unsatisfying 'cause, you know, we have $100 million of assets and you're like, "Well, gee, $250 million, $700 million, that doesn't sound like enough." One of the things that we've done since the beginning is figure out, how do you partition assets like these so that you can't have a full $100 billion loss? You know, probably most people here didn't hear there's an Asian exchange that was hacked, I guess a little over a year ago. They lost $1.5 billion in their hack. Look, they didn't have to use BitGo technology. I could have saved them $1.4 billion. Just don't put more than $100 million in a single wallet. Turns out it would have worked in their case. This is, of course, something that we've been doing, gosh, I don't know, since 2017, 2018. Our underwriters come in and check it. You know, you give us $1 billion, we're gonna split that into a whole set of wallets, and then those are all at low thresholds. If the price of Bitcoin or the price of your assets go up, we might rebalance into even more wallets. For your daily transactions, you know, it's very rare that you're hitting those large amounts of funds. Instead, we'll just hit kind of one wallet. We take a lot of precautions to try to make it so that there's no chance of a correlated loss between wallets, and that allows us to have the best and actually lowest cost insurance program in the industry. That's great. I think one of the key features is you can go right from that super cold storage to trading immediately. You know, the downside of being, you know, in a physical vault in Switzerland isn't, you know, doesn't preclude you from trading if you need to. Is that right? Yeah, that's absolutely right. Look, it does take more time to get funds out of cold storage. Now, for large amounts of funds, I think people want that. If your funds can move fast, they're probably not that secure. That means probably there's somebody somewhere you can poke with a weapon and convince them to move your funds. Getting out of cold storage takes time. Now, we do man those vaults, you know, 24/7, so we're in there a lot, and those are secured facilities. On top of that, we still have a duty to give you great service, right? It doesn't matter the cold storage is slow. You need your money now, and if you're moving just a few million dollars or whatnot, you know, you wanna get that quickly. We provide a whole bunch of mechanisms which make that true, and clients have actually given us pretty high marks because over the last few years, we've gotten faster and faster and faster. At this point, for regular withdrawals, you might get satisfied immediately, like within minutes, and then for larger amounts. Those will go through policy controls and additional checks, exactly like what we would wanna have happen from a security perspective. Frankly, it's not that often that people move $1 billion and need to move it. Right Like right now. It's usually a scheduled, planned, very well-orchestrated event. This gives us a really good balance of fast and super secure. Sure. That makes total sense. We've talked about custody a bit, but like custody is just really a strategic jumping-off point, it feels like today, for a much broader suite of solutions that you're providing. You mentioned trading. Maybe we just double-click on trading a little bit more. It's a very fast-growing piece of your P&L. Just for those that don't quite understand it, could you kinda compare and contrast the trading offerings that you're doing versus a centralized exchange? You know, I believe you've just got partnered with liquidity providers where you know your clients can trade directly from their custody wallets without having to have assets on an exchange. That's right. Like I said earlier, you know, people don't wanna have to choose a trade-off between security or liquidity. We give them both. Frankly, we're probably more like your mental model of a broker than any of the exchanges are. Some of the pithy things I like to say from time to time is like, you know, we're not an exchange. We are every exchange. If you look at liquidity in Bitcoin, you know, people usually have this mental model of, "Hey, I go to this exchange. My broker in the equities world, he's required to give me best execution. This exchange is required to do so as well." Nope, not so. Remember, we don't have any market structure. There's no requirements that exchange gets you the best price. They're only required to get you the best price on their exchange. The second part of the mental model, especially in the U.S. here, that is a little bit broken with crypto, is people usually think, "Well, look, this is the United States. We have the best capital markets. We have the biggest economy. You know, the U.S. exchanges are probably the best or the biggest anyway. So I'll just go there. It won't be that bad." They're surprised to hear that actually you can take Coinbase and Kraken and Gemini and every U.S. exchange, add them all up, and you get to about 6% or 7% of market share. Anybody that's been in the industry knows that if you're not trading on the various Asian exchanges, includes Binance and ByBit and OKX, you're simply not getting the best price. What BitGo does is different. BitGo connects to all the exchanges. We connect to all the market makers. We try to add more and more liquidity providers and venues all the time, and we just get you the best price. You onboard to us, we are your counterparty. We take care of whatever risks there are with managing money across the globe, but you just get the best price, and we then do commercially best execution for you. We actually beat the price of any U.S. exchange literally 99 out of 100 days. We're measuring this. It's in our app. We do total cost analysis at this point, so you can see it pass through to you. Because of this, our institutional trading has really been growing. You can see this in some of the numbers that have already been made public, and this is an area that we're focused on. We think that if you just play out the industry, of course, as the industry grows, there's gonna be a need for this institutional type of trading, which is gonna be just far superior than going to any single exchange. Sure. For sure. I think that's a pretty compelling value prop there. Your solution is really. I mean, is it a full prime brokerage solution? I know maybe we drill down a little bit also into your lending book. I think lending, you know, in the Bitcoin, you know, again, collateralized Bitcoin, I think is a great business. Bitcoin trades 24/7, 365. You know, loan to values are pretty conservative also. You've got that and you have staking. Maybe we kinda go through the rest of the kinda key service offerings here, Mike. Sure. We'll talk about prime first. We do have, of course, trading, and then we do have lending and borrowing that we do. We can do both sides of it. We can borrow from you and help you get a yield if you're looking for that, or, if you're looking to get some leverage, we can help you there. In terms of full prime brokerage, look, the biggest challenge for digital assets is the volatility is so high, right? We saw back in 2022, the industry, I think, got ahead of itself on lending. People trying to you know, wishing they had a huge balance sheet prime brokered, when they didn't, and people got ahead of themselves, companies got ahead of themselves with under-collateralized lending. Now, you know, we don't do that at BitGo. When I say prime brokerage, I would say it's a super conservative prime brokerage in that it's always, you know, 150-200% collateralized today. And that means you're not getting as good a leverage ratio as you would in other asset classes that have kind of more fleshed out. But that's largely due to just the volatility of the underlying assets which we are typically using as collateral. Anyway, you piece all this together, of course, we do real-time monitoring of it. We can give you margin capabilities, and it allows our clients to get that prime brokerage type of experience. This has been particularly valuable over the last 12 months. The DATs, which have now, you know, had kind of a spectacular ups and downs, they all came, and they had a common pattern. First, they're often finding us because they need that security for large amounts of assets. Second, they need to buy more. They need to get the best price, wherever that may be, and then they wanna store that inside of BitGo. Then the next thing they wanna do is they wanna leverage that up, and so they've used those types of things with BitGo for the last 12 months very successfully. That's great. Then maybe touch on staking, because I think that's a key piece of the solution set moving forward as we get some of these larger, you know, networks, Ethereum, Solana, continuing to gain traction. Yeah. For those not familiar, what staking is a number of the blockchains out there pay some of the rewards that go to validators from the network back to validators that are helping keep the network secure. Ethereum does this, Solana does this. You know, most of the newer chains have some form of staking variant. Obviously, when you're custodying large amounts of asset, people that are long holders of those may want to be able to get a yield, and so they want us to stake on their behalf. We built out a network of partners to help us with the staking, and this has worked really well. You can come to us. We got, like, 40 different staking providers. Sometimes you can ask BitGo to do it directly, but we just get you all of the staking yield, very simply on the assets you already have in custody. This has been appealing to foundations, you know, the foundation of the token itself. Solana Foundation has a whole bunch of Bitcoin with BitGo, and then we're able to stake that. One of the requirements those guys have is that they want to stay decentralized. They can't stake it all in one place because then they would be dependent on just one vendor. This partnership that BitGo has of over 40 different staking providers allows us to work with our clients, allows us to work with foundations, and this has been a great growth for us over the last few years. Now, right now, the only thing more volatile than Bitcoin is the non-Bitcoin digital assets. You know, the prices of those are down today, and you know, our business goes up and down with this. We think long term, like, look, Ethereum smart contracts are absolutely here to stay. Solana's the fastest network. I shouldn't say it's the fastest. One of the fastest networks, but it's fast as it's got a lot of traction on it. There's a lot of growth on these, and it's gonna continue. That's great. BitGo is newly public in the market. You know, without drilling down into the numbers too much, maybe just kinda explain or touch on your business model at a high level. A lot of it's recurring revenue. I think trading would be a little bit more of a variable model. I do believe you have a lot of operating leverage in the business over time as the top line grows. Yeah. Like I said, it's infrastructure. Our clients can engage with us in a bunch of different ways. At the bottom layer, that wallet infrastructure, we provide more coin support than any other provider. If you're just looking for wallets, you want self-custody, you can come to us. We do that. These days, that's mostly like a software type of product, a software as a service, type. On top of that, we have custody. Of course, that's what we're most known for. People come to us for large value security. We're the largest custodian, independent, you know, from any exchanges. We build the services on top. All of these are either accessible, you know, through our web interface for You know, venture funds tend to use that. You know, corporates tend to use that. Or it's available through API. Then we have this product called Crypto-as-a-Service, where clients that are putting together some sort of digital asset product of their own, they might be busy with bringing in users onto their platform. So Fold is a publicly traded company. Instead of just leveraging us for our software, they're leveraging us for a full regulated stack, which includes the regulated custody, which includes the regulated trading capability, et cetera. Another area we haven't mentioned yet is stablecoins. So we do a stablecoin-as-a-service product. It was just announced last week, SoFi, you know, top 50 bank, public company, is launching SoFiUSD. That's all on the backbone of BitGo's stablecoin-as-a-service. I expect that's gonna hit, you know, good growth, due to their driving of that asset. That's not the only one we do. We also do USD1, which is from the World Liberty team, and we've got a number of others. It's exciting times because that's a new use case that really has just kind of emerged, I think, for traditional institutional guys over the last couple of years. Obviously, we got the GENIUS Act passed, earlier, kind of I guess it's 2025 now, but about a little less than a year ago. And that paves the way for continued growth there. We're hitting a number of things. A lot of it is, digital asset correlated, right? Look, we go up and down with that. We're okay with that. One of the things that we've had to do is we've ridden through some of these very extreme up and down cycles of the digital asset space. I think we've learned how to do that, manage that as a company, and then of course, we have to be able to weather that storm on the go forward. We're also diversifying things like stablecoin revenue. That's all based off of U.S. dollar, and it's immune to digital asset volatility. Sure. Yeah. I mean, stablecoins are just the beginning of a tokenization way beyond USD, so a lot to you know, be excited about there. Maybe just one final one, maybe quickly, Mike. You know, if we get the Digital Asset Market Clarity Act, you know, maybe we get more big TradFi guys starting to enter the space. You know, I think, you know, it makes the pie bigger. Do you see that as a competitive threat if they start to provide a fuller suite of digital asset solutions or, you know, maybe crypto's a unique asset and they wanna white label your solutions? Kinda what some of your thoughts are there. Yeah. Look, I think everybody coming into the space is the number one best thing that can happen for our business. You know, what we've been doing, the hard fighting that we've been doing in the trenches is, you know, bringing traditional firms into digital assets at all. By the way, so Goldman Sachs, although they underwrote the IPO for us, you know, they invested in BitGo all the way back in 2018. Obviously traditional finance has had some ups and downs with getting started in Bitcoin all the way back to around 2018, I think it was. Those parties coming in is going to open up the distribution, it's gonna open up the usability, it's gonna open up the trust in the industry. It's all good. It also brings in new use cases. You know, part of the reason why those firms are able to participate or start thinking about it today is everybody's looking at tokenized equity. The use case, I don't think has been fully cracked yet. There's pockets that are working. We're in the system that's Figure just launched their ATS market. They launched an all on chain blockchain share class for their own stock. They're trying to build that up. We help with that. There's a couple of other different approaches that are out there that people are excited about. We very much welcome companies coming in. You might've seen Morgan Stanley announced that they're going after an OCC trust charter. I think a couple things will happen. Number one, these folks coming into the space greatly increase the credibility in everything that we're doing. They're validating what we've been working on. You know, 10 years ago, people wondered who are these guys, BitGo? We never heard of them. You know, nowadays we can say, "Oh, we'll go look at what BlackRock's doing. Look what Fidelity's doing. Look what Morgan Stanley's doing. Look what Goldman Sachs is doing." This is a legitimate space, so that is really valuable. Second thing, our infrastructure is actually what they need, and so of course, we're talking with all of these folks. A number of our relationships haven't been announced yet. You know, we keep our client privilege very seriously here at BitGo. We can't talk about what's not launched yet. All of these guys are coming in, and the route that they typically enter into the digital asset market is, you know, first they're looking for that foundation, right? You can't build the rest of this unless you've got a really rock solid foundation, and there's not a lot of places. Some are gonna build it on their own, in which case they might come in and use our wallet platform or rather than our custody. Others are gonna be like, "Nope, we're gonna sub-custody that to BitGo." It's a, you know, federally regulated OCC chartered bank. It's the strongest designation that you can get in terms of how you had entered. Then the next thing that's gonna happen is, in general, as you're getting started, you tend to tiptoe in. This just makes sense. It's a risk mitigated approach regardless of what firm you are. You're gonna pick off some Bitcoin, maybe some Ethereum, and you'll get started with that, and you'll test it, and you'll have a dollar limit on how much exposure you'll have. Eventually, you wanna do more. You wanna do some staking, you wanna do some trading. All of those things that we've built are relevant. They have to come back and, you know, they'll be using those types of services. We're very optimistic about what's happening now. I think, Clarity is critical actually for our industry to move forward. I guess one last thing. You know, there's been a little bit in the news about, you know, banks, protesting about stablecoin interest as part of, you know, holding up Clarity. I think this is actually kind of foolish for the banks that are protesting. I think their businesses are the ones that are gonna benefit the most if they do pass Clarity. Forget about whether or not there's interest. If we don't pass Clarity, all of those traditional banks are gonna struggle with like, "Wait a minute, am I allowed to do this? Is there a legislated clear path that I can go and build a business here?" The answer is no. Now, look, BitGo, we're gonna be fine whether we have Clarity or not. I'd rather have it, don't get me wrong. But if we don't have it, we've got a path forward. We've already got seven regulated custodians at the highest level across countries all over the planet. We'll be fine. We will get to grow, and they will be stuck, unable to enter into digital assets. This is a space where, you know, Larry Fink, CEO of BlackRock, says everything's gonna be tokenized. If you're not in this space right now, you're gonna be missing out. It's, I think, exactly backwards that anybody from traditional finance would be against getting Clarity when that's the one thing that's gonna protect their future for this asset space. That's great, Mike. We are hoping for Clarity ourselves. We are out of time though. Mike, thank you for being with us here today and sharing just a tiny piece of the BitGo story. There's a lot more behind it, so thank you very much. Thank you, Joe.