BitGo, a cryptosecurity startup, has just received regulatory approval to custody digital assets in the U.S.
BitGo has been trying to launch a regulated custodian entity since 2018 the whole time and now with BitGo Trust they have achieved the sweet victory when it has been approved by the South Dakota Division of Banking this Thursday. It means that BitGo Trust will be able to offer a regulated storage solution for crypto assets to its institutional clients.
At the moment, the company offers either an online hot wallet (available to download for everyone) or hot / cold wallet hybrid. However, unlike the Trust solution, these solutions are not regulated. Shahla Ali, chief compliance and legal officer of the company, says:
“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.”
BitGo trust has been approved by South Dakota regulators only,
but Ali adds:
“Generally, other states will give you reciprocity in the sense that other states have money transmission laws and they’ll exempt you from money transmission requirements.”
She also says that during the approval process, the company representatives met with the state regulators and adds:
“Now that it’s been approved, our hope is to build this platform out, to really demonstrate to regulators and customers that this model can work and we can really build a great trust company that safeguards assets.”
However, there is a 30 days window for the public to file an appeal against the decision. The company has stated that it will wait for the period to close, and if there will be no appeals, it will begin its operations on a technological level.
Once launched, BitGo will be taking custody of digital assets in no time.
Ali also said that she believes that it will be very comfortable for the customers to store their digital currencies as the team has worked really hard to achieve so.
As there are no standards set for the space the company is about to get in, BitGo will have to make its own in order to draw in clients.
“That’s certainly our hope, we believe that will happen, we’ve obviously engaged with 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.”
What Ali hopes for is that both institutional investors and family offices will get on board. In this case, the secure custody is perceived as a tool that will reassure customers that crypto can be valuable for them.
“I think you’ll see that the fringes will go back into the dark and cryptocurrency will come into the light and become a globally acceptable either a commodity or security, however, it’s structured. I think it’ll alleviate some of the concerns the governments around the world have that it facilitates money laundering, that it facilitates drugs.”
The journey for BitGo to launch its regulated custody of digital assets has taken nine months so far. It began this January by announcing the acquisition of the Kingdom Trust. However, the deal fell through and BitGo has decided to build the custodian on its own. The decision has been made upon engaging with customers.
“We realized they would be best served by a custodian who was entirely focused on their assets.”
Said by Clarissa Horowitz, marketing vice president, soon after the decision has been made.