BitGo, a provider of cryptocurrency security services, announced this Friday that it has received approval to operate as a trust company. According to a company statement, the South Dakota Division of Banking has approved BitGo Trust Company as a public South Dakota Trust Company.
“Custody has been the missing piece of cryptocurrency market infrastructure and this gap has kept institutional investors out of the market.” Said Mike Belshe, CEO of BitGo, “BitGo Trust Company is a qualified custodian, and therefore the only custody offering that delivers the highest levels of both security and regulatory compliance.”
Having received the requisite regulatory approval, BitGo Trust Company is now the first purpose-built custodian providing storage services for cryptocurrencies. Given the company’s history, this won’t come as a surprise to many.
BitGo – king of crypto custody
Founded in 2013 by former Google engineer Mike Belshe, BitGo has been targeting the institutional cryptocurrency market for 5 years now. Amongst other things, the firm has been offering private blockchain access and institutional cryptocurrency wallets to its clients.
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The new custody service will allow institutional cryptocurrency traders to keep their digital assets offline, and away from hackers’ prying eyes, in cold storage. Alongside this, BitGo will provide “institutional-grade” policy controls.
Custody has been an ongoing problem for the cryptocurrency market. More traditional custodians have been unwilling or unable to provide their services to cryptocurrency firms. At the same time, exchanges don’t always have the expertise to provide custody services either.
“Traditional custodians don’t have experience handling cryptocurrency.” Noted Belshe, “Exchanges that double as custodians present a conflict of interest and raise regulatory concerns.”
In its statement today, BitGo did not confirm how much its custodian services would cost cryptocurrency firms. It noted only that its setup and assets under custody (AUC) fees would be low. The custody services provider also noted that AUC fees could be reduced if a company’s AUC balance is equal to or greater than it was during the prior 12-month period.