By Tom Blitzer
Key Insights:
- BitGo and Swan Bitcoin eye the creation of the first-ever Bitcoin-only trust company.
- The collaboration focuses on blending custody security with Bitcoin’s unique attributes.
- Regulatory approval is pending, but the venture could reshape institutional crypto investments.
California’s BitGo Inc. has entered into discussions with Swan Bitcoin to create the first-ever Bitcoin-only trust company. Both entities aim to combine their knowledge and resources to offer a unique approach to Bitcoin custody services.
Merging Competencies
BitGo’s expertise lies primarily in crypto custody and security. Recent data indicates a 60% growth in its client base between January and August. Additionally, its assets under custody witnessed a 20% rise. In financial terms, the firm secured $100 million in its latest Series C funding round, bringing its valuation to $1.75 billion.
On the other hand, Swan Bitcoin operates exclusively within the Bitcoin sphere. The firm expects its revenue to increase by 50% by the end of this year, reaching $75 million. Their operations span various aspects, including fraud prevention, regulatory compliance, and efficient customer onboarding.
BitGo’s CEO, Mike Belshe, stated that their approach takes inspiration from the separation of custody and exchange observed in the US financial sector, aiming to apply a similar model to Bitcoin.
A Trust with a Specific Aim
The collaboration’s primary objective is to design a trust company to manage and administer Bitcoin assets for beneficiaries. Services under consideration include cold storage solutions, AML/KYC protocols, and fraud prevention measures. They will predominantly focus on institutional investors, governments, and company treasuries.
Cory Klippsten, CEO of Swan, mentioned the demand for a Bitcoin-focused service, emphasizing the unique features of Bitcoin to cater to this demand. However, it’s essential to understand that regulatory approval is still pending. Klippsten confirmed ongoing dialogues with state regulators and an exploration of acquisition opportunities.
Potential Implications for the Crypto World
Launching a Bitcoin-exclusive trust could reshape the wider crypto investment horizon, given the increasing allure for institutional investors in the US. Leading finance giants like the Bank of New York Mellon and Deutsche Bank are now stepping into cryptocurrency custody services. Significant shifts are on the horizon as the industry anticipates a nod from the Securities and Exchange Commission for Bitcoin ETFs by 2024.
The collaboration between BitGo and Swan Bitcoin highlights a considered approach in the ever-evolving crypto domain. Their combined expertise might offer a new perspective on Bitcoin custody, potentially influencing future financial models in the digital space.