Genesis Capital, a New York–based cryptocurrency firm that caters to institutional investors, announced on Thursday it has acquired London-based custodian Volt for an undisclosed sum.
The deal is significant because it paves the way for Genesis to become a prime brokerage—akin to Goldman Sachs in the traditional financial world—that offers its clients a full suite of services, including crypto storage.
Custody is an unglamorous but important part of the crypto industry, in which hackers are constantly trying to steal digital assets like Bitcoin. Offering a custody service also provides an opportunity to attract a broader array of institutional clients, many of which are required to hold their assets with certified custodians.
Volt is not a big name in the crypto custody world and counts only six employees. But Genesis CEO Michael Moro told Fortune that he is impressed by the firm’s technology and that he regards the acquisition as a strategic step.
“My view on the custody space is that it’s not a great stand-alone business. There’s a lot of competition, and it’s race to zero on fees,” Moro said, explaining that Genesis will treat custody as a complementary service to offer alongside its trading and lending products.
The Volt deal also coincides with a wave of consolidation in the crypto industry, where once-niche firms like BitGo are likewise trying to position themselves as full-service firms, offering everything from lending to insurance.
The acquisition also portends growing competition between Genesis and industry giant Coinbase, which came to dominate the custody space after acquiring the storage business of Xapo last year for $55 million.
A key component of the Xapo deal was Coinbase taking on the custody needs of Grayscale—another crypto giant that reportedly owns over 300,000 Bitcoins, which are currently worth around $10,000 each. Like Genesis, Grayscale is a subsidiary of crypto conglomerate Digital Currency Group, meaning the latter will likely transfer its hoard to its sister company.
Moro said he could not comment on Grayscale’s custody arrangements, saying only they are governed by long-term contracts.
All of this offers further indications that the cryptocurrency industry is coming to resemble the traditional finance industry, where a handful of large players are locked in fierce rivalries.
More must-read finance coverage from Fortune:
—Saving lives vs. saving the economy is a false tradeoff, economists say
—Real unemployment rate soars past 24.9%—and the U.S. has now lost 33.5 million jobs
—17% of unemployed workers aren’t looking for work—and that’s warping the official unemployment rate
—Does Apple’s stock buyback strategy make sense in this market?
—Goldman Sachs doubts there will be a Round 3 of PPP loans for small businesses
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: Why the banks were ready for the financial impact of the coronavirus
Subscribe to How to Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic.
