BitGo receives approval for crypto custody solution
BitGo, a cryptocurrency security startup company, has announced that it has received regulatory approval to offer a custodial solution for digital assets. The company received approval from the South Dakota Division of Banking yesterday, paving the way for it to offer a regulated custody platform to institutional investors.
Shahla Ali, BitGo's chief compliance and legal officer, indicated that this could be the first time that a regulated custodian has been built completely from the ground up. She added, "Currently ... we offer an online hot wallet solution, which is available to anyone to download our software and store their coins. We also offer a custodial solution which is a combination of hot and cold wallet," she said, although "that offering, though secure, is not regulated like the Trust."
Ali further stated, "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."
While the solution was only approved by regulators in South Dakota, it could easily be expanded to other states. Ali said that "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."
Approval by regulators in the state does not necessarily mean that the company is ready to start accepting clients. According to South Dakota law, the public has 30 days to lodge appeals that could reverse the decision. If no appeals are received, BitGo said that it will launch as soon as the 30-day period has expired.
BitGo began seeking regulatory approval in January of this year. To ease the process, it announced that it would purchase the Kingdom Trust Company, a digital asset custodian that held around $12 billion in assets at the time. However, the deal was never consummated and BitGo decided to build its own platform. The company's VP of Marketing, Clarissa Horowitz, said at the time, "We realized they would be best served by a custodian who was entirely focused on their assets."