BitGo Has a New Crypto Offer for Institutional Investors

3 min read

Yesterday, the leading blockchain security company in its industry BitGo was excited to announce it is now a “qualified custodian” after receiving a South Dakota trust charter, making it more appealing to organizational investors.

Californian IT security management company BitGo is one step closer to attract a higher number of investors as it became a “qualified custodian”.

Back in July 2010, U.S. President Barack Obama approved the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). One of the “reforms” it involved was that any hedge fund with more than $ 100 million in assets registered with the U.S. The Securities and Exchange Commission is considered an investment adviser.

Here’s the definition of “investor adviser” given by the SEC:

“An investment adviser is a person or firm that is engaged in the business of providing investment advice to others or issuing reports or analyses regarding securities, for compensation. Investment advisers may include money managers, investment consultants, financial planners, general partners of hedge funds, and others who are compensated for providing advice about securities.”

Rule 206(4)-2 of the Advisers Act, also known as the “Custody Rule”, is the one responsible for the regulation behind custodial practices of investment advisers- it “requires advisers that have custody of client securities or funds to implement a set of controls designed to protect those client assets from being lost, misused, misappropriated or subject to the advisers’ financial reverses.”

In September 2003, the SEC announced the amendment of the custody rule:

“Qualified custodians” under the amended rule include the types of financial institutions that clients and advisers customarily turn to for custodial services. These include banks and savings associations and registered broker-dealers.

A “bank” under section 202(a)(2) of the Advisers Act includes national banks, members of the Federal Reserve System, and other banks and trust companies having similar authority to national banks and supervised by state or federal banking agencies.”

Custody solutions are now part of BitGo’s system

Once BitGo became a “qualified custodian”, it means that the company has now the green light to provide investors like crypto hedge funds high qualified custody services.

Mike Belshe, co-founder and CEO of BitGo claimed:

“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.”

Institutional investors will are able to benefit from the following custody solutions:

  • ‘100% cold storage technology in bank-grade Class III vaults;
  • Support for storage of over 75 tokens and coins;
  • Institutional-grade policy controls (such as multiple signatures and spending limits);
    Multi-user accounts; and
  • Most importantly, regulatory compliance (since BitGo Trust Company is a qualified custodian)’.

This is a great opportunity for institutional investors. Investing in cryptocurrencies has never been so easy for them.

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