BitGo has had its cryptocurrency custody offering approved by a US regulator, meaning it can offer institutional investors a storage offering for digital assets which is more in line with traditional capital markets offerings.
Custody is seen as a missing part of the puzzle for the uptake of digital assets among institutional investors due to concerns about security of cryptocurrencies.
Many existing storage offerings are provided by crypto exchanges without the backing of a traditional custodian.
This is an issue as, for example, 40 Act funds in the US are required by regulation to maintain their securities and other investments with certain types of custodians designed to assure the safety of the fund’s assets.
BitGo has been looking to solve this issue throughout 2018, with its own developments and the purchase of Kingdom Trust, a digital asset custodian with roughly $12 billion in assets under storage.
The crypto security provider has now been given a major boost after the South Dakota Division of Banking has approved BitGo Trust Company as a public company.
“Traditional custodians don’t have experience handling cryptocurrency,” said Mike Belshe, CEO, BitGo. “Exchanges that double as custodians present a conflict of interest and raise regulatory concerns. BitGo Trust Company is a qualified custodian, and therefore the only custody offering that delivers the highest levels of both security and regulatory compliance.”
Traditional custodians such as Nomura and SIX have committed to their own custody offerings in the market, while other alternatives include crypto exchanges such as Coinbase, Bitstamp and itBIT.
“BitGo provides proper custodianship for institutional investors, which means we are independent of the exchange,” said Robin Verderosa, VP of product marketing, speaking to The TRADE Crypto’s sister publication, Global Custodian, earlier this year
“The custodian’s role goes beyond regulatory compliance. The custodian makes money safe because it separates ‘exchanging the asset’ from ‘holding the asset’ and distributes responsibility across different parties.
“We see a great deal of interest from institutional investors on how to best enter this market that safeguards and secures their assets, similar to the way other asset classes are protected. Besides security and protecting holdings, investors have expressed the need to find a solution that supports a diversity of coins and tokens.”