BitGo has received approval from the South Dakota Division of Banking to be a public South Dakota Trust Company. This makes it an officially licensed crypto custodian in South Dakota, and the rest of the United States, because other states generally practice reciprocity when it comes to this sort of license.
BitGo claims to be the first qualified crypto custodian in the United States, although, there are certainly other major crypto custodians active in the United States such as Coinbase and Xapo. At the least, BitGo is probably the custodian with the most cryptos available – more than 75, including major cryptos like Bitcoin and Ethereum, and numerous Ethereum based tokens.
Mike Belshe, the CEO of BitGo had this to say:
“Custody has been the missing piece of cryptocurrency market infrastructure and this gap has kept institutional investors out of the market. 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 this statement is a direct jab at Coinbase, which runs both an exchange and a custodian service for crypto.
Indeed, crypto custodianship is an essential piece of infrastructure for institutional investors, and BitGo will be specifically targeting institutional investors with this new trust company. Institutional investors deal with large amounts of money in the USD 1 million to USD 10 billion range, and they need a crypto custodian to bank their crypto to ensure no chance of getting hacked or robbed. Crypto custodians are generally insured, leaving no chance of losing crypto for people using a true crypto custodian service.
Also, when dealing with large amounts of crypto, it is essential to follow know your customer (KYC) and anti-money laundering (AML) laws to ensure no violations of regulations. BitGo will make sure institutional investors don’t have any run-ins with the law.
Crypto custodians like BitGo Trust Company are essential for crypto hedge funds. There are at least 466 crypto hedge funds and that number is rapidly growing. Crypto hedge funds will link up with crypto custodians, creating optimal investment conditions for institutional investors that want crypto. This institutional investment infrastructure could lead to the next big crypto rally.
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