BitGo Holdings, Inc. (BTGO) Q3 2026 Earnings Call Transcript

Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the BitGo Holdings Third Quarter 2026 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Rachel Dye, Head of Investor Relation. Rachel, please go ahead.

Rachel Dye: Thank you, and good afternoon, everyone. Our remarks today will include forward-looking statements. These include statements about our operating outlook, financial condition, business strategy, market opportunity and future plans. Actual results may differ materially from these statements. Information about risks and uncertainties appears in our SEC filings under the heading Risk Factors in our annual report on Form 10-K and our quarterly reports on Form 10-Q. The forward-looking statements we make today reflect our views only as of today. We undertake no obligation to update them, except as required by law. We will also discuss GAAP and non-GAAP financial measures. A reconciliation of each non-GAAP financial measure to the most directly comparable measure calculated in accordance with GAAP is contained in our earnings release and investor presentation, each of which is available on the Investor Relations section of our website at investors.bitgo.com. Non-GAAP measures should be considered in addition to and not as a substitute for GAAP measures. Joining me today are Mike Belshe, Co-Founder and CEO; Chen Fang, Chief Revenue Officer; and Ali Vapra, BitGo's new Chief Accounting Officer. Ali joins us from KPMG. Mike, over to you.

Michael Belshe: Thank you, Rachel, and thank you all for joining us today. During the third quarter, we continued to strengthen Bitco's institutional platform and improve the operating efficiency of our business. Total revenue was $2.9 billion, net income was $44.1 million and adjusted EBITDA was a loss of $4.3 million. Our revenue performance reflected continued weakness in digital asset trading activity. Following the increase in digital asset prices in mid-August, approximately 2/3 of our clients who traded with us in Q2 traded less in Q3. Digital asset sales margin was approximately 15 basis points on the quarter, driven by a higher mix of activity from lower-margin stablecoins. On the expense side, we continued to improve operating efficiency with our second quarter cost reduction initiatives contributing to lower operating expenses. We also continued to make meaningful progress leveraging AI to improve engineering productivity. Since the beginning of the year, engineering output is up 65%, while we have simultaneously reduced engineering headcount, token costs and overall AI spend. Separately, we reduced cloud infrastructure costs by migrating select workloads from AWS to our own infrastructure. These advances are enabling us to accelerate innovation, expand our capabilities and offerings to our clients and continue playing a leading role in developing the market structure that will shape the future of this industry. Lastly, during the quarter, we repurchased approximately $25 million of our common stock under our $50 million authorization, reflecting our confidence in the BitGo long-term opportunity and our commitment to disciplined capital allocation. We will discuss the financial results in greater detail shortly. First, let me cover the key operating and strategic developments during the quarter. Turning to our operating highlights. At the end of Q3, using actual September 30 digital asset prices, assets on platform exceeded $83 billion and assets stayed to approximately $16 billion. On a reported basis, assets on platform declined from $65.2 billion to approximately $59.9 billion, while reported assets staked declined from $11.9 billion to approximately $10.5 billion. These declines reflect lower median digital asset prices used in our quarterly calculations rather than the decline in the amount of digital assets held by our clients. On a normalized basis, assets on platform increased slightly from $59.6 billion in Q2 to $59.9 billion sequentially, and normalized assets state increased from $10.4 billion to $10.5 billion. Beyond the strength of the assets on our platform, we also successfully expanded our global footprint by capitalizing on transparency, speed and compliance benefits that come with being a publicly traded company and a federally chartered National Trust Bank, BitGo Bank & Trust National Association. This included opening a larger Singapore office to satisfy the increased appetite for digital asset prime services amongst the family offices and ultra-high net worth individuals and successfully launching BitGo Korea as the first new Korean entity established by a global digital asset company by securing our vast license to provide custody and transfer services for local institutional and enterprise clients across finance and technology. While we have strengthened our operating model, we have continued investing in the capabilities that make our platform more valuable to clients. Everything we built in this quarter runs through a single idea. A client should be able to reach liquidity everywhere without moving assets off our platform. That is made possible by our proprietary GO network and 3 things further advanced it during the quarter. In July, we launched our global liquidity layer to BitGo Prime, providing clients access to exchanges, market makers and OTC counterparties through a single platform. We also expanded our liquidity network with the addition of Virtu Financial, a leading global market maker. In September, our relationship with Crossover Markets, a digital asset trading technology firm surpassed $2 billion in cumulative notional volume. That volume was executed on their electronic communication network, CROSSx, and all of it was settled through the Go network, which allows for digital asset movement in and out of cold storage. We also extended access to on-chain trading through integrations with Hyperliquid and Decibel. Eligible clients today can connect to these venues through their existing BitGo self-custody wallets while retaining established controls over wallet access and fund transfers. And finally, to close out the quarter, we completed our off-exchange settlement integration with OKX to expand to international markets, building on our existing U.S. relationship established back in April. This allows eligible institutions around the globe to access OKX's trading liquidity while keeping their digital assets stored at BitGo rather than moving them on to the exchange. The common threat with all of our services is the custody layer. Because the assets stay with us, we have the flexibility to address more unique requests from eligible institutional clients such as locking tokens and building structures with calls and puts against them and to also then use those positions as collateral for financing. None of that functionality exists as a stand-alone application. It required regulated infrastructure, secure custody and an interoperable platform that brings those capabilities together and lasting partnerships and integrations to activate this ecosystem. Security and asset protection have always been at the core of BitGo's business since our founding in 2013. We believe our reputation and track record for security is one of the primary reasons institutions choose BitGo. For more than a decade, we have continuously invested in building one of the industry's most secured custody platforms, combining regulated qualified custody with geographically distributed key management, multi-signature technology and rigorous operational controls. That's why we continue to be a household name among the large institutions and are now live with 33 different U.S. crypto ETFs with more currently onboarding. Recent security incidents across the industry reinforce why this matters. Only in crypto markets are institutions required to hold assets at individual exchanges to access their trading products and liquidity, exposing those assets to exchange counterparty risk. BitGo's Go network offers a differentiated approach. Institutions can manage their assets and regulated custody at BitGo while accessing the expanding network of trading venues, products and liquidity. As we add more exchanges and integrations, clients gain greater trading flexibility and settlement capabilities without having to distribute their assets across multiple exchange counterparties. We believe this combination of institutional-grade security, regulated custody and broader market access should represent the industry standard for digital asset market infrastructure. Even though the CLARITY Act was not enacted, BitGo is actively building the market structure that institutions demand now. Today's digital asset exchanges were built initially for retail. As institutions have entered the market, they've been perplexed as neither the operating capabilities, the regulatory standing or the market structure provided by those early exchanges met the rigorous standards of traditional financial institutions. One of those standards is the separation of duties. In traditional finance, trading venues never custody your assets. Execution, custody and clearing sit with separate institutions. That separation is deliberate because it means no single point of failure can take your assets down with it. This failure to segregate duties were one of the primary causes of historical failures at Mt. Gox, Quadriga CX, Coincheck and FTX. In each case, these failures of the exchange not only affected the market, but customer assets were lost. That's the challenge that BitGo's Go network solves with our off-exchange settlement product. OES lets you allocate assets for trading on an exchange while keeping your funds safe in BitGo, a regulated fiduciary and national trust bank. Let me demonstrate while using an account at OKX, a leading global crypto exchange that recently announced a major partnership with the New York Stock Exchange. With BitGo OES, the client instead leaves our assets in BitGo's regulated custody and virtually allocates a portion of their assets onto the exchange. My OKX account is connected to my GO account, which is enabled for OES and now appears next to my custody holdings. Nothing is moved. Now I'll allocate from my custody holdings into my OKX account. Watch the OKX balance, there it is instantly. That was a ledger movement on the GO network with no blockchain transaction and no waiting. My assets are still in BitGo custody in my name. What changed is that my OKX account now has a balance that I can trade with backed by those assets. The exchange then recognizes the client's balance from BitGo and allows the client to trade against it. From the trader's perspective, it's a normal deposit on the exchange, and that's by design. I can now trade directly on the exchange and BitGo isn't in the order or execution path. I can now trade however I want and run whatever strategies I want. Nothing about how I trade changes. I was able to connect to an exchange account, allocate assets instantly while keeping them in custody and trade against them with settlement running automatically in the background. This is what industry maturation looks like. This is what institutions demand. Institutions aren't lowering their standards just to enter crypto. Crypto's infrastructure is rising to meet their needs. OES, powered by the Go network, gives them that separation of execution and custody that they're used to now with the venues and liquidity of digital assets. Changing gears. In August, we acquired NYDIG's institutional trading business, which marks an important step in broadening BitGo's financial services offering. NYDIG was founded in 2017 and established itself as the industry's premier steward for institutional Bitcoin mandates. We completed the acquisition on August 27 and has since launched BitGo Global Markets, adding expertise in derivatives, structured products and financing, along with established institutional client relationships. These capabilities complement our existing platform, expanding the range of financial services we can offer institutional clients and creating additional opportunities to deepen those relationships over time. Today, BitGo supports nearly 100 different protocols and over 2,800 tokens, which significantly expands NYDIG's product offerings. The team is also central to this opportunity. Pete Janney spent 15 years at Credit Suisse running equity derivatives businesses and is now the Head of BitGo Global Markets. He leads an established team of trading, technology and operations professionals who joined BitGo through the acquisition. For BitGo's existing clients, NYDIG's offerings introduce additional yield generation opportunities, coupled with hedging and financing solutions, all supported by a well-experienced team in structuring solutions around institutional needs. We expect to improve operating efficiency as we integrate the business and leverage our existing technology, operations and compliance infrastructure. I'll hand the call over to Chen Fang, our Chief Revenue Officer, to discuss our tokenized equities commercial priorities and how we intend to bring those capabilities to clients.

Chen Fang: Thank you, Mike. Tokenized equities are an important commercial priority for BitGo. The opportunity extends beyond representing shares on the blockchain. Institutions need infrastructure to securely hold those assets, transfer and sell them. That is the vision behind goStocks, the platform we are developing to bring traditional equities on chain. Our ambition is to connect traditional asset ownership with the flexibility of on-chain markets, supported by BitGo's custody and financial infrastructure. We have already demonstrated elements of that infrastructure. In February, BitGo and FIGR completed the first blockchain native equity trades on FIGR's alternative trading system. In July, during the limited production event for DTCC's tokenization service, BitGo Bank & Trust, an OCC regulated full-service qualified custodian integrated with the service, supported the custody, delivery and settlement of tokenized U.S. treasury collateral in live repo and reverse repo workflows. That work showed how institutions can securely hold and mobilize tokenized treasuries as collateral within a regulated framework. When DTCC launched the service into production in late October, BitGo was among the custody providers supporting it. And just a few weeks ago, Bullish successfully demonstrated a transfer of 61 million reserve bullish shares being issued in its Equiniti acquisition on Solana at the New York Stock Exchange using BitGo's wallet infrastructure. On our Q2 earnings call, we also demonstrated our goStocks product. The demo showed how tokenized equity positions could be held in regulated custody and used as collateral for borrowing. We see 2 significant opportunities. The first is broadening international access to U.S. equities and over time, other traditional investments. Today, access is often constrained by brokerage availability, local market infrastructure and the complexity of moving funds across borders. Significant capital is already held in stablecoins and digital asset wallets globally. Through goStocks, we aim over time, subject to regulatory approvals to make tokenized equities accessible through the digital asset channels investors already use. That would reduce barriers and let a broader base of investors worldwide gain exposure to U.S. equities. The second is expanding the utility of existing portfolios. goStocks will initially be held in qualified custody at BitGo Bank & Trust. Holding equity positions on-chain in regulated custody can make them easier to settle and to use as collateral, starting with financing through BitGo. Over time and subject to regulatory approvals, we expect to extend transferability so holdings can move across connected financial applications. That would give investors greater flexibility in how they manage and use their holdings. Equities are an initial focus. Over time, we believe the same infrastructure can support a broader range of traditional assets on chain. For BitGo, this creates an opportunity to expand the assets our platform serves, reach new clients globally and deepen our role in their financial activities as traditional and digital asset markets converge. Building on the expanded capabilities of BitGo Global Markets, we are excited to announce that the WisdomTree Tokenized Treasury Money Market Digital Fund is now integrated in our BitGo Mint platform. This integration enables institutional clients to seamlessly convert idle cash into yield-generating assets, which can then serve as collateral for the advanced trading and financial solutions available through global markets. Together, these offerings mark a key milestone in delivering a unified capital-efficient ecosystem, allowing clients to manage custody, capture yield and execute sophisticated strategies within a single regulated environment. We are actively pursuing commercial partnerships and distribution opportunities to bring those stocks to market, and we look forward to sharing updates as these efforts progress. With that, I'll turn the call over to Ali to review our financial results.

Ali Vapra: Thank you, Chen. With that, I'll now walk through our financial results in more detail. Total revenue for the quarter was $2.9 billion, down 34.1% sequentially and 50.9% year-over-year. Direct costs were approximately $2.8 billion, down 34.3% sequentially and 51.1% year-over-year. Our GAAP net income was $44.1 million compared to a net loss of $19 million in Q2 and a net income of $22.7 million a year ago. The sequential improvement reflected a $71.5 million unrealized mark-to-market gain on digital assets and lower operating expenses, particularly compensation and benefits as well as general and administrative expenses. Our adjusted EBITDA was a loss of $4.3 million compared to a similar loss of $4.2 million in Q2 and a profit of $13.5 million a year ago. The modest sequential decline was primarily due to lower revenue and margins during the quarter, partially offset by lower operating expenses. Breaking those results down by offering, I'll begin with digital asset sales. Revenue was $2.7 billion, down 35.2% sequentially and 52% year-over-year. After digital asset sales cost, we generated approximately $4.2 million, representing a margin of 15 basis points compared with 17 basis points in Q2 and 20 basis points a year ago. Trading activity remained weak during the first half of the quarter amid continued low market volatility. While activity began to improve near the end of August, the recovery did not fully offset earlier weaknesses as certain larger clients shifted towards holding their positions following the recovery in digital asset prices. Profitability and margin were impacted by an unfavorable mix of higher activity and lower margin stablecoin transactions. Turning next to staking. Our revenue was $68.2 million, up 5.4% sequentially, but down 24.1% year-over-year. Staking fees was $64.2 million, resulting in a take rate of 5.9% compared to a take rate of 6% in Q2 and 9.7% a year ago. Normalized assets staked was $10.5 billion, up 0.5% sequentially and up 41.1% year-over-year. Staking revenue reflected a combination of token prices, protocol reward rates and activity across supported assets. Higher ETH balances and prices supported revenue, while lower protocol reward rates and price declines across other tokens were headwinds. Separately, the sequential decline in take rate reflected a greater contribution from a large institutional client with a lower contractual fee rate. Staking economics will continue to vary based on client, token, validator and transaction mix. Our focus is on continuing to grow the asset base while improving the mix of higher-value activity over time. The next component is subscriptions and services, where revenue was $25.6 million, down 7.2% sequentially and 24.5% year-over-year. Core custody and wallet fee revenue remained broadly stable sequentially alongside modest growth in our client base. The sequential decline was primarily driven by lower nonrecurring engineering revenue, reflecting the timing of contractual performance milestones. Revenue from these engagements can vary between quarters depending upon when those obligations are completed. Our focus remains on growing recurring custody and wallet revenue and deepening existing client relationships through broader adoption of BitGo services. Now to stablecoin as a service, where revenue was $37.4 million, down 3.8% sequentially and up 52.5% year-over-year. Stablecoin sponsor fees were $34.5 million, resulting in a take rate of 7.7% compared to 8% in Q2 and 3.6% a year ago. The sequential revenue decline primarily reflected lower average reserve balances, which reduced the base on which we earn administration fees. Average daily reserve balances declined approximately 6% from Q2, reflecting the issuer's issuance and redemption activity. The sequential decline in take rate primarily reflected higher reserve interest rates and lower average reserve balances. Higher interest rates increased total reserve interest income relative to our contractual administration fees, while lower balances reduced fees earned under our tiered pricing structure. Our underlying fee arrangement remained unchanged. Year-over-year growth was supported by higher reserve balances and fixed monthly fees from newly supported stablecoin programs. We continue to see opportunities to expand the number of stablecoin programs supported by the platform. Turning now to expenses. Expenses, excluding direct costs were $56.6 million, down 5.5% sequentially and up 10.7% year-over-year. The sequential decline was driven by lower compensation and benefit as well as general and administrative expenses as a result of the cost savings implemented in the second quarter, partially offset by approximately 1 month of operating expenses related to our NYDIG acquisition. On the balance sheet, our position remained strong. We ended the quarter with $143.2 million of cash and cash equivalents and continue to maintain the balance sheet with no corporate level debt other than borrowings used to fund our lending activities. In addition, our corporate treasury held 2,399 company-owned Bitcoin with a fair value of approximately $200 million as of the quarter end. As Mike mentioned, we repurchased approximately $25 million of common stock during the quarter under our $50 million authorization, leaving approximately $25 million available for future purchases. Our capital allocation priorities remained maintaining regulatory and operating liquidity, supporting client activity, investing selectively in organic growth and strategic opportunities and returning capital when appropriate. With that, I will turn back to Mike for a few closing remarks.

Michael Belshe: Before we take questions, I want to close by reiterating our confidence in the long-term opportunity for digital assets. We believe we are still in the early stages of institutional adoption and the development of market structure needed to support a mature digital asset economy. BitGo has been at the forefront of building that infrastructure for more than a decade, and we intend to continue leading the way as the industry evolves. Our focus is on expanding our capabilities, bringing on new clients and assets, driving growth across our platform and capturing the significant opportunities we see ahead. With our expanded institutional financial services capabilities following the NYDIG acquisition and initiatives such as the Go network and goStocks, we believe BitGo is well positioned to win a growing share of the digital asset market as it continues to advance. With that, operator, please open the call for questions.

Operator: Your first question comes from the line of [ Kathy Chan ] with Wells Fargo.

Unknown Analyst: So first, I just wanted to ask, I know you guys mentioned the SNS sequential decline partially due to the lower nonrecurring engineering revenue. Can you just talk a little bit more about what kind of projects those are? Is it coming back in the fourth quarter or 2027? And just kind of talk us through the different components of like the recurring revenue pieces, how big that is a portion of SNS versus sort of the nonrecurring other than engineering, what other parts sit in that? And then I have a follow-up.

Michael Belshe: Thank you, Kathy. Thank you, Kathy. Let's see. On the nonrecurring engineering -- well, first off, we try to prioritize the projects that lead to recurring revenues. But going back to Q4 last year, remember, last year, we had a lot of new coins being built. And often when those new coins are being built, there's additional nonrecurring work that happens along with that. In 2026, so far, we've seen less of that. It's going to be kind of cyclic, I guess, or I'm not sure if cyclic is the right word. It will come and go in pockets. It's a little hard to predict exactly. But yes, in general, I don't know. It will come and go. And then from our perspective, on the engineering side, we'd much rather invest in projects which are not just nonrecurring revenue anyway.

Unknown Analyst: Okay. Got it. That's helpful. And secondly, just obviously, the client increase pretty consistent and obviously bigger in the third quarter now sequentially. Obviously, normalized assets on platform only grew slightly. So I guess just talk more broadly about for these new clients that you're onboarding, the profile of them, small, large, how long it takes for them to start generating or contributing meaningful revenue to you guys? And I guess just is there any change in terms of the average revenue or contribution profit per client that you're seeing now? Just obviously, the clients have been growing nicely, but top line is growing a little slower, obviously, recognizing some of the volatile crypto market. But just how does that correlate? And when can we start seeing it generate revenue?

Michael Belshe: Look, I think things are going in the right direction in spite of the numbers as they are on the trading side, the entire market saw a lot of downturn. You saw that from the announcements from other companies in the space as well. On the assets under custody, I would have liked to have seen a little bit higher than it was, but it's not terrible, I don't think. And then also what we really see is a whole bunch of new assets coming into digital over the next couple of years anyway. So look, we're continuing to build and make sure that we have great products and services to capture all of that, and we should see that turn around.

Operator: Your next question comes from the line of Chris Brendler with Rosenblatt Securities.

Christopher Brendler: Nice to catch up. Congrats on the solid results here. Mike, I'd like to just sort of zoom out a little bit and think about if you could help frame some of the growth opportunities from here, really sort of impressed by some of the conversations around custody and the Go network as well as NYDIG seems like an opportunity. Can you help maybe sort of put some numbers or how should we think about the revenue mix and where the growth areas are as we spin forward to next year?

Michael Belshe: Sure. Look, we hit actually all kind of markets. And so the thing we're known for is the crypto market and DeFi market, right? Obviously, that's where we started. Talking about tokenized equities coming on chain. This is going to take a little bit of time to get going. But the crypto market is a $2 trillion total market cap, whereas the capital markets are about $70 trillion in size. So just a tremendous amount of assets coming there. And then the third sector is payments, stablecoins. This is, of course, the entire banking arena. We think we're going to continue to see massive innovation kind of in this space over the next couple of years. So all 3 of these are going to be growing. And we haven't even really talked much about DeFi yet. DeFi was kind of the talk a few years ago, but all that work that's been plumbed for crypto eventually does come back as some of these products and services move back on to the DeFi types of networks. So Bitcoin is building across all of those. And then the Go network is really about, like we said, the maturation of the industry. As you start to bring in traditional players, they need to know that they've got some separation of duties so that they can isolate their risks and understand their risks. And we think BitGo is really kind of the only company that's kind of poised with the right regulatory and technology mix on that front. So lots of great things are in the works. And then obviously, we would love it if it all just grew in 1 quarter, but these are things that grow over time, and we think we're well poised.

Christopher Brendler: Great. And on NYDIG, is that going to be a meaningful contributor to top line? I didn't see if you given any numbers there yet.

Michael Belshe: We haven't given any guidance on it just yet, but we are very excited about it. So -- and a couple of things happened. We've picked up a number of folks from the team. We've picked up a number of great clients. So we think that we have a much higher sophisticated level of sophistication with the products that we're able to offer and go to market with. And we plan to take that to all of the existing BitGo clients. On top of that, the NYDIG team previously have been mostly focused on Bitcoin, and now we're bringing kind of all of the coins and all the other assets that we touch. And as tokenized equities and banking comes online as well, those also kind of feed into this. So expecting them to provide significant contributions in 2027, yes.

Christopher Brendler: Okay. If I can squeeze in one more. There was somewhat of a pleasant surprise in the client growth this quarter, but I wasn't sure if that was a change in disclosure or is it actually going to lead to additional revenue growth. Can you just break down the client growth numbers this quarter, if I can sort of help frame the modeling going forward?

Michael Belshe: We hit a little over 6,600 clients. Is that the one you're referring to?

Christopher Brendler: Yes.

Michael Belshe: Yes. I think there was a discrepancy in how it have been counted kind of before some clients that should have been in there before. There's a footnote in there somewhere about it. Overall, we think that the client count is growing healthily on the institutional account and continues to grow. In terms of how it contributes to revenue, like each client comes on, it's like planting a seed. So one of the products that we like is our crypto as a service product. You bring on one of those clients, and of course, they bring on their retail clients. We've had continued significant growth on that all through 2026, and we think that continues.

Operator: Your next question comes from the line of Ed Engel with Compass Point.

Edward Engel: One quick housekeeping one. For the NYDIG acquisition, would most of that business be reflected in the trading segment? Or are there other segments that also flows through?

Ali Vapra: I think most of it would be in the digital asset sales. So NYDIG, I think as we combine, capitalize on their expertise in institutional clients, their relationships, most of it would be in digital asset sales. Now they do manage certain funds, although that's a very small stream of revenue. That piece will be in the subscriptions and services, but primarily in the digital asset sales.

Edward Engel: Great. And apologies if I missed this, but we saw that the DTCC launched their tokenization full launch. I think it was a couple of days ago, and there's some participation by some larger traditional investment banks. Anything that you're seeing -- I know it's still early, but anything you're seeing in regards to adoption or the pipeline in terms of companies that look like they're going to be onboarding this?

Michael Belshe: Let's see a couple of notes. You're probably aware, I think to this date, BitGo is still the only qualified custodian on the Canton network. We've enjoyed the relationship with DTCC, several of their clients on BitGo. We were part of their demo all the way back to the summer as they were getting going. Overall, on this part of the sector, there's probably about a dozen different variants of tokenized stocks that are all coming online, each with their own angle. The DTCCs variant is just one of them. BitGo is supporting all of these. So we've been working with FIGR since they launched last February. We're working with DTCC. As Bullish comes online with their digital transfer agent through Equiniti completing, we look forward to be working with them. We've got our goStocks initiative. We work with the Robinhood components. So we'll hit all of these. I think this is a period of innovation. And when you see innovation, you're going to see a lot of scrambling as different products come to market with slightly different variants and the market sorts this out over the next couple of years. Also, we've got the OKXICE coming online, I guess, right about now as well. So we'll be in all of these, and it's probably going to take a little bit of time. But overall, this is going to be nothing but good for BitGo's business.

Operator: Your next question comes from the line of George Sutton with Craig-Hallum.

George Sutton: There was a discussion on your focusing on higher-margin activities. I'm curious, I sense you're more of a taker than a maker in terms of the way the things that clients are doing from a use of your different products and services. Is that not a fair state?

Michael Belshe: I wouldn't necessarily characterize it that way, but go on.

George Sutton: Well, so the point is, how do you focus on the higher-margin activities? Or how do you drive clients towards the higher-margin offerings?

Michael Belshe: Look, I think the acquisition of NYDIG is a good example. When you're getting up to the upper echelon of sophisticated traders, they are looking for not just how do they get the best price, but how do they make sure they're doing it at the risk level for which they're comfortable. Remember, these people are fiduciaries to their shareholders, they're fiduciaries to their investors. They care very much about what risks exist within all of their counterparties. So NYDIG did an exemplary job of this prior to the BitGo acquisition -- prior to us coming together. And then we're bringing that into BitGo as well. So we think this helps us continue to hit kind of those folks that are really worried about how risk works. That will, of course, lead to higher-margin products.

George Sutton: Seeing the [ Binance ] hacked, which was obviously pretty significant. It would almost seem like an advertisement for the reason to have a self-custody and really an advertising for what BitGo does. I'm curious if you've seen any velocity of movement since that point.

Michael Belshe: We haven't been able to announce them yet, but I suspect there will be significant announcements in the coming months for this. Look, to all the investors that finance as well, it's sad to see an event like this. And so definitely sympathy to everybody that had to be scared. Congratulations to finance, by the way, for getting through this and stepping up to cover their clients. But yes, I think all of this is part of a call for market structure. We've been talking about this for well over 1.5 years, I guess, actually longer than that. But also on the self-custody side, there's been some chinks in the armor on that front as people realize that some of the things that BitGo built for institutions 10-plus years ago, in other words, no single point of failure, having multiple keys using MPC, things like that. These are suddenly becoming front and center as hacks and failures have taken more cycles in the press. So we think like this is just part of the natural evolution. If you had asked me 10 years ago, I probably would have said it would have happened a lot faster than it has had. I think we've known these errors and these vulnerabilities. BitGo has been defending against them, obviously, for quite some time, and we think the rest of the industry is catching up.

Operator: Your next question comes from the line of James Yaro with Goldman Sachs.

James Yaro: While clarity has stalled, we have observed constructive regulatory developments more recently, including the SEC innovation exemptions. Could you talk about whether your -- whether you believe regulatory reform alone meaningfully unlocks product innovation in the digital asset space? Or do you still think that legislation is necessary?

Michael Belshe: Thanks, James. Let's see, I don't think clarity is going to happen anytime soon. So I think we're going to have to live without a legislated market structure. I think if you look at all the players in the space, those that have been leading towards market structure just on a commercial basis. I think that's what BitGo has actually been doing for almost a decade here. So whether you're talking about separating out custody away from exchanges, whether you're talking about being able to go to your broker and get best execution through smart order router trading, these are things that BitGo has been leading on. So the industry is going to now have to demand commercially that we mitigate the risks that can happen when you have a vertically integrated stack. And I think as you look at the new wave of players from traditional finance, they are aware of this. They expect this, and they will help us get there. So I think BitGo is really well poised like from the regulatory standing, we have a really strong position. We've been operating our trust bank for 10 years now, most recently under the OCC. That is the right structure. And yes, I think we're going to see a good time over the next couple of years.

James Yaro: Very clear. Another one on the regulatory front. The SEC did put out a rule proposal permitting RIAs to self-custody customer crypto assets. Are there any impacts -- potential impacts on your business? And is this an opportunity?

Michael Belshe: I suppose it's a bit of an opportunity. Look, the RIA segment is one that has been identified by the crypto sector for a long time. It's a really federated group. RIAs have usually kind of on average about 50 type of clients. Obviously, they vary in size. They're hard to reach. And in the past, the main reason they've been hard to reach is because the education around how do they offer crypto products has just been tough. It's like all exposure to them without any real wins. So look, if that starts to change where they're ready to get into crypto in ways that they haven't been in the past, then of course, it could be great for our business. They're all going to come and look for BitGo. We've got the products and solutions that they need right now. That's always been true. And then in terms of reaching them, I suspect it's probably going to be a relatively small number that go through direct crypto. I think for a lot of the benefit that we're looking for on the immediate side, it's -- they'll go to the ETF. They'll just get the Bitcoin ETF. But over time, as we build tokenized equities and those get into more established and regulated storage capabilities, then we'll see funds being built completely on top of digital rails and things will start to get more interesting with the RIAs.

Operator: Your next question comes from the line of Dan Dolev with Mizuho.

Dan Dolev: Really solid results here. Congrats. I had a question on stablecoin reserves. I believe it fell slightly, I think, from $4.6 billion to $4.4 billion. Can you talk a little bit about the pipeline for new programs and the sensitivity to balances and rates here and congrats again.

Michael Belshe: Thanks, Dan. Well, as you probably know, our largest stablecoin client is USD 1. So our balances can go up and down right now with them. The pipeline looks pretty good. We're still doing SoFi dollar. I think that it's poised for significant growth over the coming years. And we've got new products -- I'm sorry, new clients coming in. So stay tuned.

Operator: Your next question comes from the line of Joseph Vafi with Canaccord.

Joseph Vafi: Nice progress again here in the quarter. Maybe, Mike, could you talk how pricing is kind of part of the growth story these days, customer price sensitivity versus a crypto market that's doing okay, but not super hot and then pricing strategy like from a portfolio perspective across your products and just an update on how you see your different price points across your different service offerings.

Michael Belshe: Thanks, Joe. Let's see. On pricing, sometimes we'll try to break down one piece of what we do, maybe they'll look at custody or maybe they'll look at trading or maybe they look at staking. When you look at these each individually, it gets tough. People want to compress prices. That's why we've been moving more towards bundled pricing. The custody is kind of just built into it and then the trading and the staking come along with it. Our pricing relative to retail pricing, as you probably know, is more institutional in nature. We offer substantially lower prices than what kind of the retail competitors provide. And then on the institutional side, it's that bundling that matters. So it's the fact that they can come to us and they can use the products in a full suite that allows us to be differentiated. We just have a product that, frankly, others can't match exactly at all. Let's see on Go Network, that's an up-and-coming thing. That's a place where we feel the growth is actually about the network itself. As you get 6,000 institutions on the network, that provides a lot of trading opportunities and settlement opportunities between those parties that simply can't be met. So we think it's a network effect that wins over time. As of today, we're not expecting significant revenue from that. But over time, it will be -- it will change.

Joseph Vafi: Got it. That's helpful. And then just on the M&A front, obviously, NYDIG was kind of a unique asset as that corporate entity is kind of repositioning themselves. And it doesn't seem to me from the outside that there's kind of like a hugely like big hole in your product set that needs to be filled, but wondering how you're viewing M&A right now relative to the product set and then relative to the market for targets, how you're thinking about that these days?

Michael Belshe: Well, there's a lot of companies for sale. So we evaluate all of these, but there's a lot of weak companies out there. And as much as I wish that there was a bit of for some of them, they're probably not a good fit for us. We continue to look for opportunities. On the strategic side, look, I think increasing our trading capabilities is the #1 thing. If we did find something along that lines, that could be of interest. And then also, look, with the BitGo stock price where it's at, we'll be conservative in terms of what we do.

Operator: Your next question comes from the line of Nathan Frankovitz with Cantor Fitzgerald.

Nathan Frankovitz: Just a quick one on BitGo Labs and the October launch of Gokubu. How should we think about the contribution in 4Q and going into 2027, specifically on the OpEx relative to the cost reductions that you stated? And what milestones would you need to see on Gokubu to keep investing?

Michael Belshe: Okay. First off, I'm really excited about BitGo Labs. I think it's fantastic. It's a place where we can start to showcase some innovation components of what we do and hopefully turn those into products. But remember, it's going to be like 1%, 2% of what we do. The vast majority of what we're spending our time on is our existing institutional client base and our existing products. So I don't want anyone to get too distracted by just that. We will not let it get to a point where it's a significant cost relative to revenues that are coming in. And then we hope that it accomplishes 3 things: a) we're able to hit some of our innovation components and see how those work. B) we get a better read on the market for what matters. We do a lot of testing as to what users find exciting, whether they're interested in stablecoins or crypto yields or just cash back, et cetera. And the third thing is making sure that our platform actually can fully service the needs of the types of applications that our clients build. So I mean, as you know, we sell a full wallet platform and custody platform and crypto as a service offerings. We want to make sure that those offerings work really well regardless of what you're trying to build. So hopefully, we're able to showcase some things, innovate on some areas, turn that into some revenue and then expand the business. But it's definitely very secondary to the bulk of what BitGo does.

Nathan Frankovitz: Got it. That's really helpful color. And then just a quick one on the client growth. With the opening of the Singapore location and APAC clients tripling since the NPI license along with the signing of HashKey Cloud, what share of net revenue and clients are outside the U.S. And does your international license that you offer products or reach segments of clients that you can't reach today in the U.S.

Michael Belshe: Well, one point of clarification, we've had Singapore for, I think, a little over 2 years now. We can look up when that opened up. But let's see what percentage is international to U.S., do you know?

Ali Vapra: I think by the address about the customer location for the current quarter, it was 50- 50%. It used to be 60-40, but it's shifting to more international revenue. So for Q3, it was 50-50%.

Operator: And that concludes our question-and-answer session. And ladies and gentlemen, with that, that does conclude today's conference call. Thank you for your participation, and you may now disconnect.