Crypto custody provider BitGo has announced a new off-chain clearing and settlement service exclusively available to its regulated BitGo Trust Company clients.
The new service aims to ensure that assets never leave custody during transfer. All trade participants will cede custody of their digital assets with BitGo Trust Company, leaving them free to choose which partners they want to clear and settle with as well as check their trading limits before engaging in a trade.
A single custodian
Having BitGo Trust as the custodian for both the sender and receiver also minimizes counterparty risk during trades.
“Until now, in a digital asset trade, one party needed to assume all of the risk and act on the counterparty’s good faith, and this doesn’t really work for institutional investors,” said Mike Belshe, CEO of BitGo.
“We are bringing to market a riskless, efficient, and compliant digital asset clearing and settlement, and what makes this service possible is BitGo Trust’s strong client base.”
BitGo also claims that the new service will reduce security risks, prevent accidental compliance infringements, and minimize inefficiencies when investors allocate capital. The company also believes that off-chain trading will reduce market risk.
Under BitGo’s new clearing and settlement service, the assets being traded will be placed in cold storage at all times. Trades will be settled off-chain and transactions will then be reconciled on-chain with the relevant blockchain upon withdrawal.
BitGo hopes its new service will entice over-the-counter (OTC) desks, exchanges, asset managers, single-dealer platforms, and broker-dealers. The company further stated that it is implementing security measures able to meet even the most rigorous industry requirements.