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Beginning tomorrow, Bitstamp is giving BitGo custody of its customers’ digital currencies—meaning, Bitstamp client assets will be transferred to BitGo wallets.
David Osojnik, CTO of Bistamp, believes the move could lead to a stronger institutional presence in the crypto space. “BitGo has been one of our most trusted partners for many years, and this is a natural extension of our relationship,” Osojnik said in a statement. “Their exclusive focus on institutional services has allowed them to develop the tech and processes necessary for running a robust and compliant cryptocurrency exchange.”
Custody services have long been a serious concern for both institutional investors and regulators within the crypto space. Just yesterday, while discussing the possibility of a Bitcoin exchange-traded fund (ETF) with CNBC, Bitwise managing director Matt Hougan told CNBC that the crypto industry is beginning to address the various “regulation and custody issues” that have been holding it back from mainstream adoption.
In addition, several exchanges have sought to develop their own custodial solutions to attract institutional players. One such company is U.S.-based exchange Coinbase, which unveiled “Coinbase Custody” in July 2018. According to the company, the service is designed for traders who have a minimum of $10 million to deposit into cryptocurrency wallets, while account setup fees stand at over $100,000.
Custodial services typically provide traders with safer storage tactics, like on-chain asset segregation and private account keys, according to Coinbase. Bitstamp’s work with BitGo will now allow its clients to see all their assets kept in cold storage via “bank-grade class III vaults.” In addition, BitGo offers a $100 million insurance policy in the event of theft or software problems that result in lost coins to ensure customers will always have their funds replaced in due time.
“Institutions need a lot more than an app with pretty charts,” Mike Belshe, BitGo’s CEO, said in a statement. “They need proper security, which includes technology, people and processes, and they need exceptional client service.”
Launched in 2011, Bitstamp is one of the crypto industry’s oldest trading platforms, and one of the few exchanges to provide valid trading data, according to crypto ranking platform TokenInsight.
BitGo processes roughly 15 percent of the world’s Bitcoin transactions, and processes more than $20 million in crypto trades each month, according to the firm.