U.S.-based digital asset financial services firm BitGo is set to offer off-chain clearing and settlement service for clients of qualified custodian BitGo Trust Co. The service is offered to OTC desks, single dealer platforms, exchanges, asset managers, and broker-dealers.
The off-chain process could be a boon for institutional investors as its riskless, efficient, and compliant digital asset clearing and settlement. It also offers institutional-grade security, with multi-signature security, multi-user policy controls, and advanced security configurations to meet industry requirements.
In the off-chain process, BitGo Trust is the custodian for both sides of the trade, with assets never leaving custody, and also counterparty risk is minimized. Clearing and settlement is fast, compliant, and secure in this way as all participants custody their digital assets with BitGo Trust.
Having a common custodian helps participants to choose which partners to clear and settle with, and check their trading limits pre-trade.
Under the current scenario, one party is needed to act first and assume all of the risk of a digital asset trade and act on the counterparty’s good faith. Institutional investors are also needed to park assets at each exchange in advance while trading on multiple exchanges.
While settling trades, funds need to leave the qualified custodian and assets must be moved out of cold storage.
In February, BitGo partnerd British insurer Llyod’s of London to provide insurance protection for cryptocurrencies and digital assets such as Bitcoin held in their Business Wallet and Custody offerings. Llyod’s is providing insurance for up to $100 million of custodial assets held by either BitGo, Inc., or BitGo Trust Co.
BitGo, backed by Michael Novogratz’s Galaxy Digital Ventures and Goldman Sachs, is a provider of institutional cryptocurrency financial services, providing clients with security, compliance, and custodial solutions.
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