Family Offices at BitGo: A Brief Exploration

BitGo’s wide-ranging customer base includes a number of family offices and private funds, who themselves divide into an array of sizes and strategies — whether large or small, active or long-only, traditional lenders or DeFi enthusiasts.

Today, we’d like to provide more color on a few of these customers, describing how their investment approaches differ and why they use BitGo to safeguard their digital assets.

(Note that we’ve changed the names of several firms and individuals to protect their privacy; those have been denoted by an asterisk).

6Virtue (*): A large firm with a diversified strategy

6Virtue represents a well-known entrepreneur who made his first fortune during the ’90s internet boom and became an early investor in Bitcoin. His family office is run by Alejandro (*), the Chief Investment Officer, whose charge is to both expand and diversify the family’s holdings.

“A key part of our strategy is to use our crypto holdings to generate yield, then invest that yield in other asset classes, like VC funds, debt, and so forth,” Alejandro explains.

They’ve divided their BTC holdings into several groupings: A portion in Grayscale BitCoin Trust (GBTC), an ETF-like investment vehicle; a portion set aside as a long-hold portfolio; and a portion kept in more liquid custody.

Their primary yield-generating activity is to lend their BTC across several platforms. “We separate BTC on our balance sheet and measure it in terms of coins, rather than the at-the-moment dollar price,” Alejando adds.

In terms of custody, they previously had an exclusive agreement with a different provider, but signed up for BitGo once that ended. “When we did our due diligence and considered the technology and economics, we decided to hold in BitGo.”

Alejandro notes that BitGo’s processes run more smoothly than other providers and that the newly refreshed interface has been easy to use. “It’s very friendly to use. We can toggle between transfer information, and easily maintain different wallets for different counterparties,” he says.

“The technology at BitGo is top-notch,” Alejandro concludes. “The security is the main benefit. We don’t lose sleep over our custody.”

Jigeum: An active, multi-layer private investment company

Ulrik Lykke and Bendik Loevaas manage a Cyprus-based private investment company mainly focused on digital assets. The company’s portfolio includes early-stage technology companies, growth investments, and private fund participations, in addition to an emphasis on staking and DeFi on the crypto side.

“We’re not just invested in one box,” Ulrik explains. “But we’re very crypto-focused overall.”

Their digital asset allocation includes multiple Layer 1s and promising infrastructure projects.

They use BitGo for cold, custodial wallets — and while they find it particularly useful for receiving distributions and serving as their interim between funds and exchanges, it also meets other key needs.

“Being able to efficiently interact with DeFi protocols while enforcing strict wallet policies is very valuable to us,” Bendik explains. “On top of that, BitGo fulfills our requirement of activity logs for security and accounting reasons.”

BitGo has driven real value for Jigeum. “We need to have a good, reliable vendor that can handle our custody needs” Ulrik says. “BitGo is very clean — from the pricing model to the lack of friction in using the platform.”

Parker Family Office (*): A small office long on BTC

Tom Parker (*) represents a rather different style of fund than 6Virtue or Jigeum. “We’re a family office, but really, we’re a family; I’m the dad.”

A former financial advisor who ran his own practice, Tom has deep roots in the investing world, with particular experience in dimensional funds.

But his thoughts on asset classes changed when he read The Bitcoin Standard. “I kept thinking about it; I couldn’t sleep at night,” Tom says. “Finally, I sold all my bonds and bought Bitcoin, and I’ve been glad I did.”

Tom focuses on BTC exclusively. From his research, he’s concluded that altcoins lack the same meaningful foundation as BTC and predicts a race to the bottom for everything else.

While he has predominantly taken a buy-and-hold strategy so far, Tom is interested in generating yield through lending, as well. “If we could get 2%, our family could live off of that,” he points out.

Getting into crypto in the first place, though, felt like a radical step. That made choosing a proper custodian an even more important decision.

“When I started buying BTC, I felt like I was on the bleeding edge,” he explains. “I wasn’t comfortable with self-custody (how many times have I forgotten my car keys, let alone my BTC keys?) or even with having a single custodian. I set up accounts with four custodians, so I wouldn’t have all my eggs in one basket, which also enabled me to compare their performance.

“BitGo has exceeded my expectations,” Tom happily concludes. “I didn’t know what to expect at first, but now that I can compare it against other providers, I can see how great it is.”

His satisfaction stems in part from the feeling of safety and reassurance he gets. Much of this comes from BitGo’s status as a regulated, qualified custodian. “BitGo is solid, and if something were to happen to it, I’m confident my assets would be okay.”

But his satisfaction also comes from the human side. “The personal relationship I feel with BitGo has been vastly better than with some other providers,” Tom says. “Some of them had terrible support; I mean, it could take a couple weeks to even hear back on an email. I’ve had a great experience with BitGo, though. The people are responsive and know what they’re doing.”

Still, like any good investor, he measures the ROI in practical terms. “For us, the ROI is just the rate of return on Bitcoin, and I’m sold on it being a good risk, long-term,” Tom notes. “I’m paying x-many bps to hold BTC securely while I wait; that’s affordable and makes sense to me.”

His experiment with a variety of custodians has led him to reallocate funds: “Eventually, I consolidated assets from other custodians to BitGo, and I’ve been happy I did.”

Conclusion

These three organizations — 6Virtue, Jigeum, and Parker — comprise a diverse set of firms in what outsiders sometimes see as a more homogenous segment. Yet, from the size of their funds, to the composition of their portfolios, to the strategies they use to generate yield, they represent a rather broad cross-section.

What unites them, however, is perhaps more important. Each sees the potential in digital assets. Each realizes that choosing the right custodian matters deeply. And each has gotten value out of their relationship with BitGo.

If you’re a family office or a private investment fund, you may particularly identify with one or more of these examples. If you’d like to learn more about BitGo and how we can help you hold digital assets securely and put them to work, please reach out to us to start a conversation.