BitGo secures state regulatory nod for crypto custody service in US

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The South Dakota Division of Banking has approved the BitGo Trust Company’s application as a cryptocurrency custodian.

In a press release, the company said it had become “the first qualified custodian purpose-built for storing digital assets.” BitGo CEO Mike Belshe said, “Custody has been the missing piece of cryptocurrency market infrastructure and this gap has kept institutional investors out of the market.”

He noted the gap between those in the custody business and those who have knowledge of virtual currencies. “Traditional custodians don’t have experience handling cryptocurrency. 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.”

The company offers 100% cold storage technology in bank-grade Class III vaults, supporting over 75 coins and tokens. To further promote the new service, BitGo is offering credit for fees if after a year, the balance of assets under custody is equal to or greater than the previous 12-month period.

BitGo boasts of being the world’s largest processor of on-chain BTC transactions, processing 15% of these worldwide.

In August, it was reported that Goldman Sachs was looking to offer a cryptocurrency custody service, among other blockchain-related ventures. The other month, cryptocurrency exchange Coinbase officially launched Coinbase Custody, which was created along with Electronic Transaction Clearing (ETC).

CNBC quoted Christian Bolu, analyst for investment research firm Sanford C. Bernstein, saying that the institutional adoption of the industry required more developed custody services. According to the analyst, “As the crypto-asset class seasons and institutional demand builds, there are a plethora of opportunities for traditional firms to engage in the ecosystem. These include the provision of custodial and asset management services as well as traditional brokerage functions like market-making.”

Among other companies looking to get into custody services are Fidelity, JP Morgan and Nomura.