BitGo, a major player in institutional cryptocurrency custody, now allows its clients to trade straight out of their custody accounts thanks to SettleBit. Using BitGo’s API, SettleBit built a product that allows customers to settle their BitGo’s holdings on SettleBit’s platform, as reported by The Block, February 5, 2020.
From the Safety of a Custody Account
Imagine if a user could trade Binance order books while their funds rested safely in a hardware wallet. Holding one’s funds on an exchange would no longer be necessary, greatly reducing risks associated with hacks and loss of funds.
While this is a pipe dream for retail investors, institutions with crypto holdings on BitGo‘s custody platform will be able to do just this. SettleBit now allows BitGo clients to trade holdings in their custody accounts without first depositing the funds.
BitGo’s head of financial services, Nick Carmi, explained to The Block:
“We know that many of our clients want to be able to trade without moving their assets out of cold storage. Using our settlement API, SettleBit has created a simple and elegant solution.“
Battle of the Custodians
In the traditional markets, custodians play the important role of holding digital ownership documents for nearly every financial instrument that flows through the system.
On the contrary, custody is optional in crypto, but institutions with large sums of capital are still wary of self-custody, preferring to defer this to specialized companies like BitGo, Anchorage, and Coinbase Custody.
Value-add services such as the trading functionality unlocked by BitGo and SettleBit are the need of the hour. In order to thrive, custodians need to establish sustainable business models, and this requires them going beyond mere custody.
If a new wave of institutions entered the crypto market, they would choose their custodian on the basis of safety and ease of operations. Being able to trade from the safety of a custody account is an advantage that could bring BitGo more clients. If other custodians want to stay in the market, they too will have to innovate and make their customer’s lives easier.
A major battle is brewing in the custody market as several players look to become a dominant force before real institutional flows hit the crypto market.