BitGo Launches Off-Chain Clearance and Settlement Service
Digital asset finance and custody provider BitGo has announced that it is now offering off-chain clearance and settlement services to a select group of clients.
The Palo Alto, California-based firm revealed this via a press release published on Tuesday, May 14.
According to the press release, the new service is available to clients of BitGo Trust Company, the firm’s qualified custodian. The service is available to such customers as asset managers, over-the-counter (OTC) desks, exchanges, and broker-dealers.
The company says that the service is designed to help institutional investors by addressing such issues as counterparty risk, inefficient capital allocation, compliance, and security risks.
To address some of the issues, BitGo has announced that during a trade, a client’s assets will not be moved from custody and that clearing and settlements will be fast, regulatory compliant and secure.
BitGo Trust, according to the statement, will be the common custodian for the two parties in a trade. As per the firm, this feature combines with the fact that funds will not be leaving the custodian’s wallet to eliminate counterparty risk.
At the moment, digital asset trading requires one of the parties to “assume all of the risks and act on the counterparty’s good faith.”
According to BitGo, this isn’t helpful to institutional investors. Asset security is enhanced by the fact that assets do not move from cold storage.
Trades will be settled off-chain but once the settlement is done, clients will be able to redeem their crypto assets on-chain.
In early May, BitGo announced that it had hired Nick Carmi as the firm’s new financial services executive. Carmi is an experienced former Wall Street forex trader and advisor who has promised to help BitGo fix the challenges that prevent institutional investors from fully participating in the crypto market.
In April, BitGo enhanced its security environment with the acquisition of another certification. The service organization control (SOC2) certification comes after an external auditor completed a thorough review of the firm’s compliance systems.
It ensures the company conforms to standards with regard to things like confidentiality, integrity, security, availability, and privacy among others.
Earlier in March, the U.S. Securities and Exchange Commission (SEC) sought the public and overall crypto sector’s input in its quest to reassess custody rules as they apply to digital assets trading and custody regulations.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.