Crypto wallet and custodian, BitGo has been granted a license by New York’s financial regulator to operate as a limited liability trust company.
The trust company charter from the New York State Department of Financial Services enables BitGo to offer its cryptocurrency trading and custody services to companies based in the state.
BitGo is now on even firmer footing with its designation as a qualified custodian under the SEC’s requirements. Also, the NY approval reduces reliance on third-party financial institutions and allows the exchange to provide deposit-taking, custody and fiduciary services for digital assets, which are usually limited to banks or registered broker-dealers.
In a statement, BitGo highlighted the approval of its banking bid, adding that it can now provide the tech and regulatory clarity that New York’s investment advisers require.
With a banking charter, BitGo can provide sub-custody services for any financial institution seeking to secure large amounts of digital assets, like holding assets for the main custodian. The institutional crypto custodian already allows its users to cover up to $100 million worth of their digital assets held in their accounts.
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While BitGo’s access to New York’s crypto ecosystem eliminates regulatory headache, the company now competes with other custody providers and exchanges such as Coinbase, Gemini and Paxos, which have secured similar licenses.
BitGo under Increased Regulatory Scrutiny
“We are extremely proud to receive the approval for a trust charter from NYDFS to serve the world’s premier financial organizations that are based in New York State. The past year has been exceptional for BitGo and the digital asset markets overall, primarily due to the influx of large financial services institutions that bring a new level of credibility, liquidity and stability to the crypto ecosystem,” said Mike Belshe, CEO, BitGo.
However, a New York charter would place BitGo under increased regulatory scrutiny. The blockchain firm was already the subject of an enforcement action by the Treasury Department back in December. It agreed to pay just short of $100,000 to settle violations of sanctions rules administered by the Office of Foreign Assets Control, which said it could have fined BitGo more than $50 million.
Acquisition talks between PayPal and BitGo had broken down three months ago after the two sides apparently failed to agree on a valuation. Bitgo, which provides institutional clients with security and financial services for digital assets, was last valued at $170 million in a 2018 funding round.