BitGo, a crypto custody firm, is set to acquire Prime Trust according to a source.

The cryptocurrency custody company BitGo has reached a preliminary agreement to acquire Prime Trust, another crypto custody specialist regulated in the state of Nevada, according to a source familiar with the matter.

The deal is in its preliminary stages and still requires regulatory approval, according to the source.

Prime Trust had been the subject of speculation, with some online suggesting that the company was facing bankruptcy. The financial terms of the deal were not disclosed by the source.

BitGo declined to comment, while Prime Trust did not respond to requests for comment.

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The need for safekeeping and storage of cryptocurrencies, particularly for institutional customers and high net worth individuals, has driven digital asset custody to prominence, with many different options available and firms commanding high valuations. The issue has also drawn the attention of the U.S. Securities and Exchange Commission (SEC), which has put out proposed rulemaking on custody issues.

Prime Trust, based in Las Vegas, raised $107 million in funding midway through 2022, before the crypto bear market really began to bite. However, the news of late has not been good, with the firm shedding a third of its workforce at the end of January this year and announcing it would cease operations in Texas where the firm was pursuing a money transmitter license.

Reporting contributed by Will Canny and Nikhilesh De.

Edited by Nikhilesh De.