BitGo has received the green light from the South Dakota Division of Banking to act as a qualified custodian for digital assets, according to a Business Wire press release.
The approval means the BitGo Trust Company can now offer secure storage for digital assets “designed for institutional customers,” Chief Compliance Officer Shahla Ali told Bitcoin Magazine. “Built on BitGo’s multisignature security, BitGo Custody delivers modern security for modern assets,” Ali continued.
Ali went on to explain that “BitGo has been working on its application for its charter to be a qualified custodian for the past year.” Per South Dakota regulations, the company won’t begin storing assets under the Trust until a 30-day period has elapsed.
Along with the volatility of cryptocurrencies — which stablecoins are seeking to remedy — the obstacle of having a safe storage option for cryptocurrencies has obstructed institutional investors from entering the market. Seeing as these investors are used to having their funds safely stored or being FDIC insured, BitGo CEO Mike Belshe believes the lack of readily available custodial services have kept “institutional investors out of the market.”
BitGo is not the first cryptocurrency company to offer custody services. Digital assets platforms Coinbase and Gemini have both launched their own custody solutions in a bid to attract institutional investors to the market, as well, and financial institutions such as Goldman Sachs and Northern Trust are reportedly planning to launch similar services.
In the press release, Belshe points out that, unlike custody services offered by exchanges, BitGo is solely focused on cryptocurrency custody. Built on the technology behind BitGo’s wallet services, the custody will offer cold wallet support with storage in “bank-grade Class III vaults,” support for over 75 cryptocurrencies, multi-user accounts and around-the-clock support.
The custody service is the latest attempt by the company to build out its services. Recently, BitGo implemented a predictive Unspent Transaction Output (UTXO) management system. The UTXO system manages micro-units of cryptocurrencies “by minimizing transaction sizes at high fee rates, while automatically sweeping up and processing many small fragments of coins when fees are low.”