Institutions Can Now Stake Bitcoin Through BitGo and Stacks, Locked for About Six Months. What Is the Catch?

BitGo (NYSE: BTGO) has launched Bitcoin (CRYPTO: BTC) staking through Stacks (CRYPTO: STX) for eligible institutional clients of BitGo Bank & Trust. According to a Stacks Labs post on November 3, 2026, clients can stake Bitcoin from their BitGo accounts. This Bitcoin is locked up for approximately six months, paired with STX equivalent to 5% of the Bitcoin’s value, allowing clients to earn interest paid in Bitcoin.

The staked Bitcoin remains time-locked on the Bitcoin network, held within BitGo’s regulated custody under the controls investment committees require. According to Stacks’ institutional page, the target annual yield stands at about 3%.

On November 4, cryptocurrency prices ticked up, but the surge wasn’t driven by BitGo’s announcement, since a broader crypto bounce lifted all three. STX climbed to $0.35, up 7.8% over 24 hours, while Bitcoin rose 3.7% to $80,360. BitGo shares also rose 5.3% to about $5.60. Since Bitcoin remains in custody, what do institutions sacrifice to gain the yield?

What BitGo Clients Get From Bitcoin Staking on Stacks

A standard Bitcoin script timelock keeps the coins unspendable until a specified date. Clients can expect to get their principal back at maturity, and there is no risk of slashing, a penalty that some networks impose to confiscate part of a staker’s coins for misconduct.

This staking model differs from traditional ways to earn on Bitcoin. With Wrapped Bitcoin, BTC is handed over to a custodian or bridge, which issues an IOU token on another blockchain, leaving the holder at the issuer’s mercy.

Lending involves a borrower who holds the BTC and pays interest, which puts the lender at risk should the borrower default. With Stacks staking, the Bitcoin stays put, mitigating these risks.

Interest payments come from Stacks miners who expend Bitcoin to compete for the chance to produce Stacks blocks and obtain STX. This Bitcoin flows to bond holders weekly. Each bonding period has a target interest rate; however, Stacks says the actual rate “can vary due to the timing of miner reward distributions.” Since January 2021, Stacks has distributed over 4,200 BTC through this mechanism.

For BitGo, this initiative opens a new revenue stream. The timing helps, since its staking revenue fell 28.8% year over year to $64.7 million in the second quarter. Additionally, its take rate—the portion of client returns it retains—fell from 16.1% in the first quarter to 6%. BitGo and Stacks have been collaborating since 2021, and BitGo began offering custody for sBTC, a Bitcoin-backed token by Stacks, in August.

The Catch Is a $500,000 STX Stake for Every $10 Million of Bitcoin

Stacks’ guidelines say participants can unlock their Bitcoin early but will forfeit the remaining yield, and the paired STX will remain locked for the full term. So, if an institution exits after three months, it can retrieve its Bitcoin but will still be tied to STX until the bond matures.

The significant catch is the requirement to hold STX. A Bitcoin position valued at $10 million necessitates about $500,000 in STX. Stacks warns that STX price fluctuations could pose a risk to participants.

Over six months, a 3% yield on $10 million would generate about $150,000, but if STX fell by 30% during that period, it could erase those gains. Notably, STX is currently trading at 90.9% below its peak of $3.86 in April 2024.

STX’s price is volatile, up 172.3% over 90 days but down 6.9% over 30 days. Bondholders are locked in during these price swings, facing the potential downside without the ability to respond.

Moreover, the rate of return is tied to STX performance. Because miners spend Bitcoin to earn STX block rewards, a decline in STX’s value could reduce miner spending. Stacks prioritizes paying active bonds their target rate first and distributes any excess to STX-only stakers and a reserve fund. While this helps maintain stability, it doesn’t guarantee miners will spend more than STX’s current value.

BitGo Custody and Stacks Code Still Carry Risk

Clients remain dependent on BitGo Bank & Trust, while the Stacks Endowment approves participant addresses for each period. The STX component operates on Stacks smart contracts, and there was a recent incident on October 30 where a governance attack on Arkadiko, a separate Stacks application, highlighted potential vulnerabilities in the network’s code.

Stacks Labs benefits from each bonded Bitcoin, as each bond necessitates an STX purchase, yet their announcement lacks key details, including BitGo’s fees, the identity of client participants, committed Bitcoin amounts, and who manages the STX for BitGo’s clients. As of November 4, the custody list on Stacks’ institutional page includes Fireblocks, Fordefi, Ledger with Leather, and Anchorage Digital, but BitGo is notably absent.

Bitcoin holders have a range of options for earning yields, from lending and wrapped tokens in decentralized finance (DeFi) applications to Bitcoin covered-call ETFs that generate income through options sales. However, these alternatives often carry risks such as borrower risk, issuer risk, or capped profits. Stacks has designed its staking model to keep the Bitcoin leg free from these risks.

Could BitGo’s Bitcoin Staking Lift BTC or STX Prices?

In short, the answer appears to be no for Bitcoin. The staking program locks up BTC institutions already own, creating no new demand. Additionally, activity in the staking program remains relatively modest; Stacks reported approximately 735 BTC, about $59 million, bonded across its first two periods in its third-quarter data.

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