The US-based blockchain security company BitGo has received public trust company status from the South Dakota Division of Banking, BitGo said on Thursday. The approval means that the company’s existing storage service is now a ‘regulated’ custody for institutional investors offered through licensed BitGo Trust Company, the virtual coin startup claimed in a statement.
The BitGo custody offers cryptocurrency cold storage in a bank-grade Class III vault, which means that the time for breaching it is set to 120 minutes compared to 15 minutes for Class M or 30 for Class I. The BitGo service uses multi-user accounts and supports more than 75 coins and tokens, the company explained.
To become a regulated custody provider, BitGo had applied for registration as a public South Dakota Trust Company, which means that the firm must regularly file financial audits, comply with the state anti-money laundering (AML) and know-your-customer (KYC) rules, and send disclosure filings every month. The management team of the public trust companies must undergo a fingerprint-based criminal background investigation as well as a credit and a litigation report, the financial regulator explains.
South Dakota license is in force only within the state borders.
“Custody has been the missing piece of cryptocurrency market infrastructure and this gap has kept institutional investors out of the market,” Mike Belshe, the chief executive officer (CEO) of BitGo said.
“Traditional custodians don’t have experience handling cryptocurrency. Exchanges that double as custodians present a conflict of interest and raise regulatory concerns.”
Currently, the US cryptocurrency exchanges Coinbase and Gemini offer custodian service while bank giants Goldman Sachs and Citigroup are reportedly preparing similar operations.