Gemini, the $7.1 billion crypto exchange, is entering wealth management with the acquisition of a digital asset platform for financial advisors, CNBC has exclusively learned.
According to Dave Abner, Gemini’s global head of business development, the company has agreed to buy BITRIA, a five-year-old San Francisco-based startup whose tools help advisors manage holdings of Bitcoin and other tokens.
According to Abner, who declined to disclose how much Gemini paid for the deal, the move creates one of the industry’s first full-service digital asset custodians for advisors. Gemini intends to combine its crypto custody and exchange capabilities with BITRIA’s portfolio management programs, allowing advisers to collect tax losses, for example, he said.
“Advisors currently manage the largest pool of money in the country, and they hear from their clients that they want access to crypto,” Abner said in a phone interview this week. “This creates an end-to-end, one-stop experience for advisors to manage all of their clients’ digital assets within their traditional portfolio management systems.”
Crypto insiders have predicted a boom in mergers this year as a cohort of newly formed digital asset giants like Gemini and Coinbase seek to acquire skills and expand their offerings. Just yesterday, Coinbase announced that it is buying Chicago-based FairX to offer derivatives to retail and institutional clients.
Though crypto began as a retail investor-led phenomenon more than a decade ago, the rise of Bitcoin, Ethereum, and other coins over the past two years has attracted larger investors to the space. That has created a need for ways to give wealthy investors access to crypto through familiar wealth management tools like separately managed accounts.
“Nobody else in the crypto space is trying to cater to the wealth management community like Gemini,” Abner said. “We are already the world’s largest service provider for crypto ETFs. Now we’re moving into the asset space and will be the only pure-play, full-service provider of crypto assets.”
BITRIA, which changed its name from Blockchange in November, is one of a small handful of crypto companies that have sprung up to service financial advisors. Competitors include Onramp Invest and Eaglebrook Advisors. Assets of the broader financial advisory industry have skyrocketed in tandem with booming stock markets, topping $110 trillion during the pandemic.
Gemini, founded in 2014 by Winklevoss twins Tyler and Cameron, was valued at $7.1 billion in a funding round in November. The skyrocketing valuations in the industry have left companies awash with cash and mandates to drive growth.
The acquisition followed a partnership between the two companies announced in 2020. BITRIA employees, including co-founder and CEO Daniel Eyre, are joining Gemini, the companies announced.
“The future of wealth management lies in digital assets and blockchain technology, and the integration of BITRIA’s technology with Gemini bridges that future,” Eyre said in a statement.