BitGo Trust becomes regulated crypto custodian

Company will court institutions with BitGo Trust’s storage option for 75+ crypto tokens.

BitGo, one of the world’s largest processor of on-chain bitcoin transactions, has announced that its BitGo Trust off-shoot has become a regulated custodian of digital assets – offering secure crypto storage for institutional investors.

The company has become accredited by the South Dakota Division of Banking as a company purpose-built for storing digital assets. Its systems, built on BitGo’s multi-signature security, which has formed the basis of its hot wallet technology since 2013, will – the company says – provide “modern security for modern assets.”

Custody has become a massive talking point within the cryptocurrency space through the course of 2018, as the industry has begun courting regulatory approval, institutional investment and a wider range of consumer-facing investment options. In recent months, Goldman Sachs, and the NYSE-backed Bakkt, have both put custodianship at the forefront of their offerings, while company’s like HyperVault and Global Blockchain Technology have also begun work to enter the market with their own takes on the technology and necessary insurance backing.

“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, in the company’s press release.

“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.”

In its press release, BitGo touted its custody offering as delivering 100% cold storage technology using “bank-grade” vaults, support for 75+ coins and tokens, “Institutional-grade policy controls” and “multi-user accounts”.

During our interview with HyperVault’s Sean Walsh at the World Blockchain Forum last week, he told us that “99.9% of the fiat money is still sitting on the sidelines of crypto, but it really is just waiting to jump into the pool when some of these institutional-focused products are released and available.”

He believes that custody is central to releasing that investment. “They aren’t going to put their money in,” he said, because “the regulatory environment doesn’t really support going with an uninsured custodial service.”

HyperVault, in offering such an insured solution it hopes to take live later in 2018, is preparing to insure deposits in the hundreds of millions of dollars range.

Global Blockchain’s Shidan Gouran touted his company’s plans to collaborate with a Middle Eastern state on a similar custodial service. Having already forged close business links with Dubai, he said “we’ve been in talks with a major financial player in the world, a country actually.”

“That would be a world’s first,” he continued, “No country has, to date, insured a cryptocurrency exchange like they would a bank, though. And this country is seriously considering that, in partnership with us.”