The United States to Get Bitcoin-Only Trust Company
BitGo and Swan Bitcoin have revealed plans to establish the first Bitcoin-only trust company in the United States, pending regulatory approval. The new entity will function as a trust company, providing services such as Bitcoin custody, administration, and management for its beneficiaries. Swan CEO Cory Klippsten stated that the goal is to offer Bitcoin custody without the risks associated with other cryptocurrencies. While the companies are currently in discussions with state regulators, they have not yet filed for regulatory approval.
Targeting Institutional Investors
The Bitcoin-only trust company will primarily cater to institutional investors such as asset managers, pension plans, family offices, governments, and company treasuries. It will offer a range of services including cold storage, fraud prevention, Anti-Money Laundering (AML), and Know Your Customer (KYC) protocols. This move comes as institutional investors in the crypto space continue to grow rapidly, with major asset managers seeking regulatory approval for a spot Bitcoin exchange-traded fund (ETF).
Competition in the Custody Space
BitGo currently provides digital asset security and custody for over 700 cryptocurrencies. In contrast, Swan Bitcoin focuses exclusively on Bitcoin investments, offering users the ability to invest through one-time or recurring purchases. The custody of records for Swan’s users is held at Fortress Trust and Bakkt, with BitGo serving as a cold storage custodian. Other large financial institutions like Bank of New York Mellon and Deutsche Bank also offer cryptocurrency custody solutions to institutional investors.
Potential Impact of ETF Approvals
The CEO of Swan believes that there is a high likelihood of multiple ETF approvals in 2024, which would attract new entrants into the Bitcoin market. This creates a need for mature and reputable custodial partners. However, the Securities and Exchange Commission (SEC) has delayed decisions on spot Bitcoin products, and analysts predict further delays until early 2024 as deadlines approach.
Hot Take: A Dedicated Bitcoin Custodian for Institutional Investors
The establishment of the first Bitcoin-only trust company in the US signifies a growing demand for dedicated custodial services for institutional investors. This move aims to provide a secure and focused solution for Bitcoin custody, addressing concerns about the risks associated with other cryptocurrencies. As the crypto market continues to mature, it is crucial to have reputable custodial partners that can support institutional adoption. The potential approval of ETFs in 2024 could further accelerate this trend, bringing more institutional investors into the Bitcoin market.
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