BitGo, a new blockchain security company has announced that it has being approved to offer cryptocurrency custody services here in the United States. As noted by CCN, this approval will have a major impact on growth of the company especially now when large institutional investors are reluctant to invest more money due to the substantial risks associated with provision of these services.
According to a press statement from the company on Thursday 13th September, the regulatory approval was in form of a state trust company charter from the famous South Dakota Division of Banking. At the time of writing, BitGo is now the only regulated custody service in the market that is offering digital asset storage services in the country.
Open to Regulatory Scrutiny
Most of the startups in the industry face little or no regulation from the government due to lack of proper mechanisms. BitGo approval to offer custody services means that the government and its regulatory bodies will not be able to monitor its operations continuously and more efficiently than before. However, the CEO Mike Belshe, is of the idea that the regulations will not hinder potential customers from using their services.
Mike is on record stating that regulation is the only missing piece in this innovative and progressive infrastructure. Hedge Funds, family offices, and other corporates are reluctant to invest in digital currencies due to lack of a platform that can store their assets and without worrying about their safety and security.
Following the approval, BitGo is now required by the government to file financial audits on a yearly basis and also abide with the stipulated KYC and AML regulations. More importantly, the company is not obliged to monthly disclosure filings. The company has also hinted that the company aims to become a fully-fledged broker dealer but did not reveal when that will happen.
High Demand for Cryptocurrency Custody Service
A quick overview of the industry reveals that there is a high demand for cryptocurrency custody service that is accountable, reliable, and customer-oriented. Apart from BitGo, other companies that are also offering a similar service are Gemini, Coinbase, and Citigroup.
As the number of investors in cryptocurrency increases, the demand for these services will skyrocket and this means that BitGo and other companies will be able to profit and expand their clientele base. Asset management services are also on high demand as most investors do not know how to manage their digital currencies or don’t have ample time to do so.
Finally, BitGo managed to acquire $12 billion digital asset management firm, Kingdom Trust, early this year and as fate would have it, this move was meant to position the company for success as the premier provider of crypto custody services. Proper management of the company coupled with strict adherence to the state financial rules will greatly help the company succeed and expand its customer base. Other companies that have the potential to offer the same services will also come up thereby making the niche even more competitive and profitable.