BitGo Crypto Asset Custodian Gets Qualification Clearance with US Regulators
BitGo Gets Regulatory Nod to Act as Qualified Custodian for Digital Assets
BitGo, a crypto security startup, has announced that its BitGo Trust has received an approval by the South Dakota Division of Banking, meaning that it can now provide digital assets regulated storage solution for institutional clients.
The chief compliance and legal officer, Shahla Ali, said this marks the first time a regulated custodian was built from scratch especially for crypto assets. She said that:
“Currently … we offer an online hot wallet solution, which is available to anyone to download our software and store their coins. We also offer a custodial solution which is a combination of hot and cold wallet,”
“that offering, though secure, is not regulated like the Trust.”
Shahla Ali continued to note that the approval will allow them to provide a qualified custodian offering that’s regulated. She further noted that:
“The trust company will enable us to offer a qualified custodial offering that is regulated, that has the money laundering and know your customer requirements. Our custodian offering already has money laundering and KYC requirements … [but the Trust is] for institutional clients … especially for those who are registered advisors and broker dealers.”
Representatives from BitGo met with South Carolina regulators during the approval process. Now that BitGo Trust has been approved, Shahla Ali believes that they will focus on building the platform out in order to demonstrate to customers and the regulators that the model can work. She also notes that, by safeguarding assets, the company will build the much-needed trust.
Public has 30 Days to File an Appeal
Although the company already has customers will to start storing their assets with the BitGo Trust, the general public are given 30 days to petition the decision, under the South Dakota Regulations. To give room to any appeals, BitGo said that it is already set to start operations at least on a technical level, but will wait for the 30-day period to elapse.
Should there no be appeal, the company will go ahead and launch BitGo Trust, taking custody of assets. Shahla Ali categorically stated that:
“That's certainly our hope, we believe that will happen, we've obviously engaged with many many large market makers who do not engage with the cryptocurrency space because they can't custody their assets”
“Even large family offices that are managing their own funds want a secure option where they don't have to fear [thefts].”
It’s been a Long Journey
The journey to launch a regulated custodian has been long, considering that BitGo started working on it since January 2018 when the company announced it was acquiring the Kingdom Trust Company. That time Kingdom Trust was a digital asset custodian, accounting for around $12 billion worth of assets under storage.
The move to acquire the company was meant to bring institutional money into the cryptocurrency space. BitGo hoped to move along with the idea but the deal fell through, and the company announced its plan to build its own custodian from scratch in May
Hope to Attract Family Offices and Institutional Investors
Shahla Ali hopes that the product will attract both family offices and institutional investors, helping them have a secure custody of digital assets. According to her, BitGo will offer tools to reassure local governments and investors that cryptocurrencies have the potential to offer value to the two groups.