Prepared remarks
Hello, everyone. Thank you for joining us, and welcome to BitGo First Quarter 2026 Earnings Call. After today's prepared remarks, we will have a question and answer session. I will now hand the call over to Rachel Dye, Head of Investor Relations. Please go ahead.
Hello, everyone. Good afternoon. Thank you for joining BitGo's Q1 2026 Earnings Conference Call. Our remarks today will include forward-looking statements, including those regarding our future operating results and financial condition, such as our business strategy, market growth and objectives for future operations. Actual results may vary materially from today's statements. Information concerning risks, uncertainties and other factors that could cause these results to differ are included in our SEC filings, including those that are stated in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2025, and in our other filings with the SEC. These forward-looking statements represent our outlook only as of the date of this call. We undertake no obligation to revise or update any forward-looking statements. Additionally, the matters we discuss today will include both GAAP and non-GAAP financial measures. Reconciliations of any non-GAAP financial measures to the most directly comparable GAAP measures are set forth in our earnings press release. Non-GAAP financial measures should be considered in addition to and not as a substitute for GAAP measures. Joining me today on the call are Mike Belshe, Founder and CEO; as well as Ed Reginelli, CFO. With that, I will now turn the call over to Mike.
Thank you, Rachel, and thank you everyone for joining us. We delivered strong underlying business performance in Q1 despite continued softness across the broader digital asset market. While market activity created pressure on our headline financial results, underlying monetization across the businesses remained strong and we continued to gain market share across assets under custody, trading volume and several of our product verticals during the quarter. We also continued to invest across product, platform, and go-to-market capabilities, while making meaningful progress across several strategic growth areas that we believe will matter over the long term. Before I go deeper into the quarter, I want to address an important point regarding the accounting presentation of our results as we expect this will be an area of investor focus. BitGo today operates multiple businesses across trading, staking, financing, stablecoin infrastructure, settlement, and other related services. Under GAAP, different parts of the platform are recognized differently for accounting purposes, with certain activities reflected on a gross basis and others reflected on a net basis. As the business continues to scale and diversify, reported revenue alone does not always capture the underlying economics or monetization profile of the platform. In January, we launched derivatives within our digital asset sales business. Adoption has been encouraging, with approximately $3 billion in notional derivatives trading volume in Q1 alone. As a result, a portion of our client activity shifted from spot trading to derivatives products. That mix shift matters when evaluating our reported revenue. Because spot trading activity is reflected on a gross basis while the derivatives are reported on a net basis. As a result, the sequential decline in total revenue does not fully reflect the underlying platform economics, and reported revenue comparisons to prior periods are not directly comparable. More broadly, we believe investors should evaluate the business through the underlying margins, take rates, and net economics after direct transaction-related costs associated with each of our core revenue streams. We are building institutional-grade digital asset infrastructure, the secure regulated control layer that institutions rely on to build within digital assets. Our clients increasingly want integrated workflows across regulated custody, trading, financing, settlement, stablecoin infrastructure, and related services through a single trusted partner. We continued to strengthen that foundation throughout Q1, and we believe its importance will only increase as the market matures. We view custody as the entry point to the broader BitGo platform, and the foundation of our client relationships. Clients establish trust, bring assets onto the platform, and increasingly expand into our other products and services with a single integrated framework. This land-and-expand strategy is central to how we deepen client engagement. It's how we increase workflows across the platform and drive long-term platform value. We also continue to see growing participation in the space from traditional financial institutions, including asset managers, issuers, and other large counterparties. In our view, this remains one of the most important long-term tailwinds for BitGo. These institutions are generally not building infrastructure from scratch. They are looking for trusted partners that can support digital asset adoption in a regulated and scalable way. This is exactly where BitGo is focused and where we believe we are differentiated. Our advantage is the combination of regulatory standing, security architecture, and the breadth of capabilities we provide within a single integrated platform. Operationally, this was reflected in a continued deepening of client engagement across the platform, increasing our number of clients served to 5,569, up 42% year-over-year, and users to 1.2 million despite broader market headwinds. Reported assets on platform at the end of Q1 were approximately $63 billion and reported assets staked were $11.8 billion, both down from prior periods in dollar terms, primarily as a result of lower digital asset prices during the quarter. Because digital asset prices can materially impact reported asset values, we also evaluate underlying asset growth on a price-normalized basis. We believe this more accurately reflects the fundamental growth of the business, client inflows, and BitGo's continued market share gains independent of the market price movement. Using current quarter digital asset prices across all periods, normalized assets on platform actually grew 29% year-over-year and 10% sequentially. Normalized stake balances grew 21% year-over-year and 27% sequentially. Bitcoin and Ethereum balances on the platform grew 131% year-over-year and 7% sequentially. Taken together, we believe these demonstrate continued underlying momentum across the business despite the broader market volatility. Let's now dive into some key operational and commercial highlights from Q1. A key focus throughout Q1 was continuing to broaden the reach of our institutional platform through expanded commercial relationships and partnerships. For example, in Q1, we significantly expanded our partnership with 21Shares, one of the world's largest issuers of cryptocurrency exchange-traded products. This highlights the underlying demand for regulated crypto exposure in key markets around the world, including throughout Europe, and builds upon BitGo's existing markets. Additionally, just a few weeks ago, we announced plans with OKX, a leading crypto exchange, to bring automated off-exchange settlement infrastructure to institutional clients trading on OKX in the U.S. This is an example of BitGo helping solve structural challenges for institutional trading, which has historically required institutions to prefund assets on exchanges and take counterparty risk against those exchanges. It addresses the growing demand from institutions to separate custody from trading risk. We believe this is a major milestone for the industry, clearly establishing BitGo as the leader in institutional settlement. Beyond these announced partnerships, we also deepened relationships across a broader set of institutional clients, exchanges, asset managers and ecosystem partners during the quarter, including several strategic engagements that have not yet been publicly disclosed. These partnerships are important not simply because of their headline value, but because they reflect the increasingly strategic role BitGo plays within the institutional digital asset workflows. They demonstrate that institutions are choosing BitGo, not only for custody, but as a premier, core infrastructure partner to support broader operational and financial activity. Throughout the quarter, we continued to extend product capabilities into strategic growth areas. As I touched on earlier, we launched derivatives trading in January to support growing client demand for tools that help manage volatility, hedge exposure, generate yield, and structure risk more efficiently. Adoption in the first quarter following launch has been encouraging, and we have already seen meaningful engagement across the platform. Importantly, some existing spot clients are now incorporating derivatives into broader workflows within BitGo, which is exactly the type of cross-product adoption we want to drive over time. Stablecoins are another area where we made meaningful progress and where we continue to see significant long-term opportunity. We have said consistently that stablecoin infrastructure can become one of the most important growth areas for BitGo over time, and this quarter reinforced that view. Stablecoin infrastructure is one of the clearest examples of how BitGo's platform extends beyond trading into broader financial and payments workflows. During and shortly after quarter end, we launched BitGo Mint, a one-stop portal where clients can mint, burn, and convert stablecoins from one type to another. We also continue to support clients and partners across reserve management, transaction processing, and the broader operational stack around stablecoins. When we look at client conversations today, the range of stablecoin use cases is getting broader across payments, treasury management, settlement, tokenized asset infrastructure, and embedded financial applications. We believe BitGo is well positioned to benefit from these trends, and we are pleased to announce several stablecoin-related commercial partnerships, including with Stable T, SoFi, and The Better Money Company. On financing and broader institutional workflows, we launched our unified financing platform and further expanded prime services' capabilities including additional risk management, structured products, financing, and treasury tools. These investments are strategically important. Each time we add a new capability, that helps clients keep more workflows inside the BitGo ecosystem. We deepen client engagement, increase the overall utility of the platform, and make BitGo more central to how those clients operate. Geographic expansion has also remained an important priority. This quarter, BitGo was named Issuer and Primary Custodian for FYUSD, a U.S. dollar-backed stablecoin designed for institutional adoption across Asian markets. In Europe, beyond the 21Shares partnership, we added new traders to BitGo Prime's liquidity network in April, improving execution for our clients on a regulated infrastructure. I would like to now provide some context on the financial results before I hand this over to Ed for more detailed discussion. We were not insulated from the market environment. Softer market conditions reduced activities in parts of the business and the non-cash markdown on our digital assets treasury weighed on GAAP earnings. However, despite this environment, the underlying economics of the business remained resilient relative to broader market conditions, as they were supported by continued market share gains, improved monetization across several of our core business lines, and ongoing client engagement across the platform. At the same time, we continue to invest in the strategic areas we believe will drive durable long-term growth, such as product, platform, regulatory capability, and go-to-market execution. Having operated through up and down cycles in our 13-year history, we believe periods like this often create the best opportunities to strengthen the business and deepen our long-term competitive position. Looking ahead, some parts of the business remain sensitive to market activity and token prices, while other parts are benefiting from onboarding, product expansion and continued traction with clients and partners. Ed will take you through that in more detail, including the financial bridge for the quarter and the key drivers across each business line. Before I hand it over, I want to close with a broader perspective on where we see the industry heading. Institutions continue to move into digital assets. Stablecoins continue to become more relevant to real-world payments and financial workflows. Tokenization continues to create new infrastructure needs. At the same time, regulatory clarity continues to improve across key jurisdictions, including constructive momentum in the United States around market structure and digital asset legislation such as the CLARITY Act. We believe greater regulatory clarity is one of the key factors that can further accelerate institutional adoption and BitGo's total addressable market over time, particularly as traditional financial institutions seek clearer regulatory frameworks before committing additional capital and resources into the digital asset market. As the market matures, clients increasingly want trusted, regulated, integrated partners rather than fragmented piecemeal solutions. We believe those structural trends continue to support the long-term demand environment for BitGo. Periods like this often separate businesses that are simply exposed to market activity from businesses that are building durable value. Our role is not to call the market. Our job is to continue strengthening the platform, deepening the client relationships, and positioning the business to emerge stronger as adoption expands. We did that in Q1. Now I will turn it over to Ed.
Thank you, Mike, and thank you everyone for joining us today. Let me start with the consolidated financial view and then walk through each of our major offerings. In the first quarter, total revenue was $3.8 billion, up 113% year-over-year and down 39% sequentially. The year-over-year increase reflects a larger digital asset sales business and a broader contribution from Stablecoin-as-a-Service relative to the prior year quarter. The sequential decline was primarily the result of lower digital sales activity and a soft crypto market environment. As Mike noted, the headline percentage change overstates the decline in trading revenue as a portion of spot trading activity has shifted to derivatives, which are reported on a net rather than gross basis. For that reason, we do not think that analyzing total revenue alone fully captures the underlying economics of the quarter. While total revenue declined 39% sequentially, direct cost also declined at a similar rate. At the same time, margins and take rates improved across digital asset sales, staking, and Stablecoin-as-a-Service. As a result, the sequential decline in total revenue was more pronounced than the change in the underlying economics of the business. Adjusted EBITDA loss was $1.7 million in the quarter compared with a positive $3.9 million in Q1 of last year and a positive $12.1 million in Q4. The year-over-year and sequential change reflected weaker market conditions, lower subscriptions and services revenue and continued investment in the business. It also included approximately $3 million of one-time legal and professional costs and other one-time charges associated with the IPO process and other strategic initiatives. GAAP net loss was $60.7 million in the quarter compared with a net loss of $25.7 million in Q1 of last year and a net loss of $50 million in Q4. The primary driver of that result was negative mark-to-market adjustments on digital assets, as well as elevated IPO-related stock-based compensation expense, which we expect to normalize from Q1 2026 levels going forward. Let me now move to the offerings, starting with digital asset sales. Revenue for digital asset sales was $3.7 billion, up 128% year-over-year and down 39% sequentially. While overall trading activity reflects a weaker market environment, the underlying economics of the business improved during the quarter. On a normalized basis, excluding the accounting impact of the derivatives mix shift, our underlying trading economics outperformed the broader market sequentially and significantly outperformed on a year-over-year basis. We believe this reflects continued market share gains in institutional digital asset trading. Overall margin was 32 basis points, compared with 20 basis points a year ago and 24 basis points in Q4, primarily driven by the contribution from derivatives activity following the launch of the offering on January 1st of this year. Strategically, we view derivatives as an important extension of BitGo's platform. Clients increasingly want integrated workflows that include risk management, hedging, yield generation, and structured solutions alongside spot execution. Expanding those capabilities strengthens client engagement and increases the strategic relevance of our trading platform over time. Turning to staking, revenue was $49.4 million, down 66% year-over-year and 15% sequentially, primarily reflecting lower token prices. Staking take rates increased 16.1% from 7.6% in Q4 and 12.5% in the prior year quarter, driven by additional token onboarding and a more favorable validator mix including the contribution of the higher economics of the Canton-related activity. While the current mix may vary over time, the broader takeaway is that we are improving the economic quality of this business line while continuing to expand token support. Subscriptions and services revenue was $25.6 million, up 11% year-over-year and down 35% sequentially. The sequential decline primarily reflected a lower level of one-time ecosystem and implementation-oriented projects compared with Q4, when activity in this area was elevated. While these projects are not recurring in nature, they remain strategically important because they often support token onboarding, client implementations, and broader downstream revenue opportunities across the platform. As a result, we do not view the sequential revenue decline as representative of the underlying health of the recurring revenue base. Stablecoin-as-a-Service continued to be the bright spot during the quarter. Revenue was $38.2 million, up 44% sequentially. Take rate improved to 7.4% from 5.5% in Q4. Growth was driven by continued client adoption, product enhancements, and new partnerships. We view stablecoin infrastructure as a significant long-term growth opportunity for BitGo, supported by expanding adoption across payments, settlement, treasury management, and broader financial applications. Finally, interest income was $0.9 million, up 259% year-over-year and 89% sequentially. Turning now to expenses. The most important point is that the quarter reflects both temporary and strategic factors. We incurred approximately $3 million of one-time legal and professional fees related to the IPO process and other strategic initiatives. Our stock-based compensation of $11.2 million was also elevated during the quarter compared to $0.8 million in Q4 of 2025. We expect a moderation in share-based expense on a go-forward basis. During the quarter, we continued to invest in talent, product development, and platform capabilities as part of a deliberate long-term strategy. We are managing the business with discipline, but we are not managing the business to maximize one quarter of profitability at the expense of our long-term growth opportunity. Our balance sheet remains strong, including approximately $186.6 million of cash and $167.1 million of Bitcoin held in treasury on the balance sheet as of quarter end. Combined with our capital-light model, this provides the flexibility to invest through the current cycle, support client activity across the platform and pursue strategic growth opportunities from a position of strength. I would also like to briefly touch on the higher interest expense in the quarter. This reflects funding used to support customer borrowing and lending activity on the platform. Importantly, this was operational in nature rather than corporate financing and helps enable revenue-generating client workflows within the business. Moving now to our outlook for Q2 2026. Based on quarter-to-date trends, we are assuming that digital asset market conditions will remain broadly consistent with current levels, building on the stronger performance observed at the end of Q1. Digital asset sales revenue is expected to remain broadly consistent with Q1 with margins anticipated to be comparable, assuming a similar mix of derivatives and spot trading activity. Current trends indicate strong year-over-year growth for the quarter. Staking revenue is expected to remain broadly consistent with Q1, supported by continued growth in staked assets despite ongoing price volatility in key tokens. Subscriptions and services revenue is expected to grow sequentially on a reported basis, supported by client growth across custody and wallets, while also benefiting from non-recurring ecosystem and implementation-related work. Stablecoin-as-a-Service revenue is expected to grow modestly sequentially, supported by ongoing client adoption and new partnerships. Total expenses for the second quarter, excluding direct costs associated with digital asset sales, staking, and Stablecoin-as-a-Service, are expected to decrease from Q1 levels which were driven by IPO-related charges during the quarter and normalization of stock-based compensation. The company will continue to invest in long-term platform growth and go-to-market execution. With that, I will turn it back to the operator to open the call for questions.
Questions and answers
We will now begin the question and answer session. Please limit yourself to one question and one follow-up. Your first question comes from the line of James Yaro with Goldman Sachs. Your line is open, please go ahead.
I would love to just get a little bit of an update around the Stablecoins-as-a-Service demand from partners and how this has evolved as the CLARITY Act progresses? And then maybe longer term, how would you expect the act passing to impact the demand?
Hey, thanks, James. Appreciate the question. Good to speak to you all. In terms of stablecoins, demand continues to grow strong. Basically, everybody's out there looking at CLARITY and other regulatory proposals, which do not allow interest. If you have a broad distribution of users at your bank or financial institution, you are faced with a choice: do you launch your own stablecoin and be able to participate in yield and use it with your partners and business, or do you give that up to somebody else who will take it? So in general, strong interest. I know others have cited lengthy pipelines. We've got a couple of deals we cannot announce yet, but demand continues to look really positive. Also, we did just extend our USD1 contract, so we are happy that that partnership has been doing fantastic.
That is really helpful. Maybe just as a follow-up, sort of a similar question around tokenization facilitating tokenization projects and how you see the opportunity set for your business there.
Look, I think tokenized equities have really exploded in the last six months. There are at least four different models for how to bring tokenized equities to market. We are proud that we are participating with all of them because we are infrastructure. One of the benefits of being infrastructure is that we participate in all of these models and then work with the clients to help them choose. I think the market's going to figure out which of these work best. The first model we are proud of is that we are the sole custodian within the Figure Market ecosystem, which started in February. They have a model using Provenance and Figure's ATS. On top of that, there are tokenized wrappers that exist and a couple of different players pursuing that. You saw DTCC announcing a plan to go to market. We will be participating with all of these, and we think it opens up our business tremendously toward how we grow in the direction of prime brokerage. We are very excited about this, we are heavily investing in it, and more to come.
Your next question comes from the line of Pete Christiansen with Citi. Your line is open, please go ahead.
Thank you. I appreciate the question here. Mike, back on Stablecoins-as-a-Service, to what degree is BitGo involved in the design and construction of the networking, meaning connecting with other partners which may not be part of the BitGo client ecosystem? My thinking is there is an opportunity from a lead generation perspective for services with Stablecoins-as-a-Service emanating from one particular client to others. Just wondering if you could provide some color on that. And curious on any learnings here on scaling this business and what it could mean for potentially launching L1-as-a-Service at some point. Thank you.
Great question, Peter. On the first point about stablecoins, one advantage BitGo has with a large client base is that anyone that launches their stablecoin directly with BitGo immediately plugs into an entire network. At the bottom of our stack, we have a self-custody wallet platform that is distributed globally, and hundreds of exchanges and broker-dealers are using that. As soon as you integrate with the BitGo API, you light up all of those parties. Some traditional firms coming into the space are more focused on distribution while BitGo is focused on building the flywheel to grow it. BitGo has tremendous reach into the DeFi ecosystem, into the crypto ecosystem, and to partners such as hedge funds and venture funds. When clients use the BitGo platform for stablecoins, we actively help them with distribution and go-to-market strategies; we are motivated and incentivized to do so. Historically, a few stablecoins launched and stayed at low adoption for a long period because of poor go-to-market plans. We help our clients avoid that. Regarding the second part of your question about L1-as-a-Service, the topic has come up. Some of the new L1s, particularly those designed around stablecoins, are addressing the need to pay fees in a stablecoin. Some chains allow you to pay fees in the stablecoin itself, whereas on chains like Ethereum or Solana you need a small balance in the native token to pay fees. These innovations reduce friction, and I think they are required features. As for BitGo's ambitions, there could be something in the future, but we have not announced anything publicly yet. Stay tuned.
Your next question comes from the line of George Sutton with Craig-Hallum. Your line is open, please go ahead.
Hey, guys. This is Logan hopping on for George. Mike, I wanted to start with a specific one on Canton. Obviously, you were an early supporter there, and you made a few announcements since the start of this year expanding that partnership. It seems like a blockchain that we keep hearing a lot about and it is getting more business. Could you walk through some of the different ways that you are set to benefit from their growth and give us a sense for where that relationship could go in the future?
Sure. Canton has been a big supporter of institutional-grade blockchain applications. We are proud to be the only qualified custodian on the network today. Canton deserves credit for addressing early some of the institutional complaints that come with building applications on blockchain, in particular privacy and how you receive assets. For example, concerns around dust transactions on Bitcoin and Ethereum are solved in Canton. They have been able to bring in a number of participants and they have a thoughtful token distribution approach that helps incentivize the network and grow before causing market dislocations. In terms of BitGo, there is a lot of depth that goes into supporting a particular coin or asset: what features we support, how many staking providers we are interoperable with, and what flexibility clients have. Part of our growth is making sure we meet all of our clients' needs. For Canton specifically, it has features that help institutional clients accept deposits and prove them in a way that addresses regulatory and legal concerns. BitGo is not just integrated with the chain; we implement those features and build workflow capabilities such as batch approvals and whitelisting to make the integration operationally viable for large clients. We are well poised and happy to have a large network on Canton, and as the Go network and others expand, we expect continued growth.
Second, just a quick one. Putting the reporting differences aside, are you able to walk through how the net economics on spot volume compare to derivatives volume for you? I want a better understanding as this shifts over time — what we would expect to see on that net revenue line.
I'll hand it to Ed in a second, but some quick color: in crypto markets, as in other markets, derivatives tend to be a more economic way to trade. Volumes on the derivative side will continue to grow and eventually outpace spot markets. We saw some conversion from spot to derivatives in Q1, which was expected, and we hope to continue to grow that. Our margin on a derivative product is higher than what you would have in spot markets, so we are pleased with that. Ed, did I leave anything out?
No, as Mike mentioned, we were excited to extend more product within our trading platform. We have strong client adoption and we remain very optimistic about spot trading as well. Year over year, we have seen tremendous growth. We did go down sequentially, primarily due to exceptionally high volume in Q4 from a few key clients. Overall, we are excited about trading and expanding our capabilities and product launches.
Your next question comes from the line of Brett Knoblauch with Cantor Fitzgerald. Your line is open, please go ahead.
Thanks, guys, for taking my questions. Maybe just on the segments, the subscriptions and services sequential decline was a bit more than I was anticipating. I know you called out it may have been due to lower onboarding or implementation fees. Could you provide some color on the underlying strength in that business? How did subscriptions and services perform outside those one-time non-recurring fees?
Thanks, Brett. On the one-time components, when we take on new coins and build integrations, some have particular technology components that are extensive, and we charge onboarding fees for that work. What we really want to emphasize is the ongoing recurring revenues that come from real clients. Yes, the one-time components came down. Subscriptions and services have been in line with expectations other than the lower one-time fees. Another point is that we are moving the revenue mix up the stack. Custody and subscription fees by themselves are often a cost center for clients, but fees tied to trading, staking, borrowing, and lending are paid in the context of revenue-generating activity for clients, which changes client willingness to pay and the overall economics. It complicates describing the business because we have multiple products and services. We shared previously that roughly 72% to 73% of clients use two or more products and over half use three or more products. Bringing clients in via custody and expanding into other products is our strength.
We have seen tremendous growth in the number of clients utilizing our custody and wallet products, which provides a recurring revenue stream. That story remains very strong. Again, the big story was in Q4 we experienced a very large volume of ecosystem projects. Excluding that, the business performed very strongly year-over-year and sequentially. Overall, we remain optimistic about our customer pipeline and that part of our business growing.
Maybe if I could just follow up on staking. Assets staked declined, which is generally due to asset price declines. It looked like the take rate ticked up a good bit quarter-over-quarter. Did you take up pricing on the staking side?
We had a couple of different factors. There was a change in the mix of partners we work with, and some coins have stronger rates, which improved economics. On a normalized basis assets under stake did grow. Remember the assets you stake tend to be more volatile than Bitcoin, so reported USD values can fluctuate. But the underlying asset growth and mix improvements have been positive.
To add, as we reach a certain size and volume with certain coins, we can push more staking onto our own nodes, which appreciates a much higher margin. That supports margin growth in the staking business.
Your next question comes from the line of Ed Engel with Compass Point. Your line is open, please go ahead.
Thanks for taking my question. A question on the increased stablecoin take rate. Any more color on what's driving that? I know there are moving pieces between partnership mix and transaction revenue. I want to get an idea of whether transaction revenues will start to drive that business rather than just interest income.
Actually, I think it is mostly that we kicked off the business with discounts early as coins were growing, and now we have graduated beyond those discounts so the take rate increases as a result. In terms of stablecoin conversions, we do a lot of conversions, but those are relatively low margin and show up more in the trading side rather than under the stablecoin revenue line.
And on the OKX integration for off-exchange settlement, it seems like this structure could become the industry standard. How do these integrations help the business economically? Is it primarily to gain and maintain market share, or are you able to monetize some of those trading fees?
Great question. By getting access on the platform, you have the ability to address those clients in many ways. We are trying to build the strongest and largest settlement network, and being connected to major exchanges is important. Regarding monetization, one underappreciated element in crypto is pricing risk. When trading, there are three components of pricing: the cost of the underlying asset, the profit margin you want to take, and the risk you assume. Crypto markets are volatile and require prefunding of exchanges, which complicates measuring and pricing risk. Off-exchange settlement reduces that risk and allows firms to better quantify it, which helps them price correctly. That should compress spreads in the market as risk is measured and controlled more precisely, and we expect institutional participants to find BitGo's settlement network attractive for that reason.
Your next question comes from the line of Brian Dobson with Clear Street. Your line is open, please go ahead.
Thanks for taking my question. At the top of the call, you spoke about growing your share of a client's business organically over time. Can you give us a little color on what that looks like and how you are thinking about client acquisition cost?
Thanks, Brian. Overall, the market is expanding. What started with Bitcoin has grown into many other assets, stablecoins, DeFi, and now tokenized equities. The more clients you have on platform, the more opportunities to match flows on the settlement network. We look for partnerships where one client begets more clients. The OKX integration is an example where we can find overlapping clients and introduce services to each other's users. Anywhere we can find partnerships that create network effects and bring more clients to the platform, we consider that a win.
Next question comes from the line of Joe Vafi with Canaccord Genuity. Your line is open, please go ahead.
Thanks for the question. Maybe we talk about the loan book a little bit — how you are thinking about that strategically, where it may go from here, how it is performing in this volatile market, and then a quick follow-up after that.
Sure. The loan book is currently roughly around $200 million outstanding with client-facing loans. We believe there is an incredible opportunity ahead of us. In the past, we have had more demand than supply of dollars to lend; many clients are looking for U.S. dollars to borrow. We try to find unique ways of bringing in additional dollars. The IPO was helpful in bringing additional funds to support the program. We will continue to build that program given the significant opportunity.
Adding to that, tokenized equities should greatly expand the market for margin lending because there is tremendous demand to borrow against fully collateralized positions across a broader set of assets. There are many more people that hold equities and would be willing to post them as collateral than those who hold only Bitcoin. Tokenized equities should grow the market significantly once they are more broadly available on-chain.
I did not think about opening the margin lending market on tokenized equities. Quick follow-up: can you talk about the mechanics of some customers switching trading volume from spot to derivatives? If they wanted derivatives volume, they could have done those away from you. What motivated the mix shift to your platform?
One of the most important but least glamorous things we do is get the regulatory standing right. Our clients appreciate that we have OCC chartered standing and regulatory relationships around the world. Once they have gone through onboarding and diligence with BitGo, it is difficult to replicate that across multiple partners. Historically, clients could trade derivatives with a number of parties, but that often required opening accounts offshore or with crypto-native firms that may not match the clients' desired profiles. The desire to have a one-stop trusted partner where they know the counterparty, have seen our insurance, SOC reports, and regulatory posture, makes them inclined to move more workflows to BitGo, including derivatives.
In the interest of time, we ask that you please limit yourself to one question only for the remainder of the Q&A. Your next question comes from the line of Chris Brendler with Rosenblatt. Your line is open, please go ahead.
Just wanted to dig a little deeper on the derivatives business. It's early days, but a good start. As you think about the impact on net margin, is it safe to assume that the increase you have seen in net capture rate has been due to the addition of derivatives revenue without a denominator impact? Can you talk about how you expect that business to contribute in Q2? Also, one follow-up on Stablecoin-as-a-Service: more detail on the growth and partners and how the book will look as you grow beyond World Liberty — how significant are non-World Liberty assets expected to be as you progress through the year?
The take rate or margin we saw in Q1 was benefiting from the net reporting of derivatives. If you just look at the spot business, margins are consistent with Q4. As we get more derivative trades, that should help influence our net take rate higher going forward.
On stablecoins, we do have some clients we cannot preannounce yet. We launched our Mints and Burn Center last quarter, which allows our 5,600 clients to mint and burn directly and convert between stablecoins programmatically via API. The intention is not to limit it to just BitGo's stablecoins. We see programmatic conversions as an important part of the future, and more commercial deployments should come as clients adopt these capabilities.
Your next question comes from the line of Dan Dolev with Mizuho. Your line is open, please go ahead.
Really nice results here, congrats from us. I have a question on the bank and trust. BitGo now holds an OCC national bank charter. This puts you in a pretty exclusive category among crypto-native firms. Beyond the obvious trust and compliance signaling, what does this charter concretely unlock in terms of new revenue lines?
One thing to note is we converted to an OCC charter quickly after conditional approval; typically this process can take many months. When we built BitGo Trust Company in South Dakota in 2018, it was limited in scope. Every new product required additional licensing and regulatory engagement. In the OCC process, we put a broad business plan covering trading, staking, custody, and other activities, and the OCC has been collaborative. The charter gives us comprehensive regulatory standing to operate a wide range of services under a single charter, which reduces friction for product expansion and better aligns with our vision for prime brokerage and related institutional services. The services we already offer on top of custody are where we are growing, and the charter supports expanding those offerings.
Your next question comes from the line of Cassie Chan with Wells Fargo. Your line is open, please go ahead.
Thanks for taking my question. The number of clients continues to grow and ticked up again this quarter. How has the profile of these clients changed in terms of AUM, or are they actually using multiple products in addition to custody right from the start? Just curious if that has evolved as well.
Thanks, Cassie. We have a lot of crossover between our services for clients and that continues to be positive. The profile of clients is shifting toward traditional financial firms coming to BitGo. We have signed deals with firms that a year ago would not have been listed in any crypto-related product, and you will hear announcements this quarter. Regulatory clarity remains an important next milestone for more conservative firms to solidify their digital asset plans. Right now we are seeing strong engagement, RFIs and RFPs from new entrants, and that activity is driving growth across client segments.
Your final question comes from the line of Stephen Glagola with KBW. Your line is open.
Thanks, Mike and Ed, for taking the question. Could you unpack more on how you are thinking about balancing reinvestment and strategic growth initiatives around product, platform, and regulatory capability while also driving operating leverage for sustained positive and growing EBITDA over time?
Great question. We've been through several up and down cycles in Bitcoin over the years. Down cycles are often the best times to build, and AI is helping us on the build, reducing costs of development. We do not see a need for material additional costs beyond current investments. We incurred one-time IPO-related expenses and legal costs this quarter, which were typical. We believe there is strong demand for tokenized equities and being first matters. We also believe BitGo has among the broadest support of L1s and L2s of any major custodian, certainly broader than some peers, and staying ahead requires continued investment. We will continue to build while watching the bottom line and ensuring we are building a healthy business. As the market exits its bear cycle, we expect to see wins on economic measures across BitGo.
We have reached the end of the question and answer session. I will now turn the call back to Mike Belshe for closing remarks.
Thanks, everybody, for joining us today. To close, I just want to come back to three points. First, underlying monetization has held up better than the gross revenue presentation would suggest. We are encouraged to see our team launching derivatives trading products, which contribute to higher overall margins and improved take rates across digital asset sales, staking, and Stablecoin-as-a-Service. Second, we continue to strengthen the business itself. We launched new capabilities, expanded business lines, added clients and partners, advanced stablecoin infrastructure, and continued investing in the people and platform that we believe will drive long-term benefits and growth. That is the business we are building, and it is the lens through which we believe investors should evaluate our progress. Finally, BitGo remains uniquely positioned as the institutional-grade digital asset infrastructure platform, the secure regulated control layer for digital assets. Our advantage is the combination of regulatory standing, security architecture, and the breadth of capabilities we provide within a single integrated platform. We are operating in a large and evolving market and continue to see encouraging demand across all areas of the business. Importantly, while our reported asset values were impacted by lower digital asset prices during the quarter, our normalized assets on platform and normalized staked balances continue to grow meaningfully, which we believe will drive upside in our model as digital asset prices recover. Thank you, everybody.
This concludes today's call. Thank you for attending. You may now disconnect. Goodbye.