Introduction
BitGo and Swan Bitcoin recently announced their plans to launch a Bitcoin-only trust company in the United States, pending regulatory approval. The joint venture aims to provide Bitcoin custody, administration, and management services, catering specifically to institutional investors and government entities.
Bitcoin-Only Focus
The forthcoming entity will exclusively focus on Bitcoin, addressing the concerns of major clients and partners who prefer a software and services stack solely dedicated to Bitcoin's unique features. This Bitcoin-only approach will eliminate the risks of having other altcoins under the same roof, according to Cory Klippsten, CEO of Swan Bitcoin.
Regulatory Approval and Acquisition Options
BitGo and Swan Bitcoin are currently in discussions with state regulators regarding their plans, but they have not yet filed for regulatory approval. Klippsten stated that the companies are evaluating acquisition options before proceeding. These steps ensure compliance with regulatory frameworks and security measures.
Target Audience and Services
The new venture primarily targets institutional investors, including asset managers, pension plans, and family offices, as well as governments and company treasuries. It will offer a comprehensive range of Bitcoin-related services, such as cold storage, fraud prevention, Anti-Money Laundering (AML) protocols, and Know Your Customer (KYC) protocols. These services are essential for institutional investors seeking maturity, reputation, and technological proficiency in their Bitcoin custody solutions.
Growing Institutional Market in the US
Institutional investors in the cryptocurrency space are rapidly expanding in the United States, particularly as asset managers pursue regulatory approval for a spot Bitcoin exchange-traded fund (ETF). Established financial institutions, including Bank of New York Mellon and Deutsche Bank, are already offering cryptocurrency custody solutions to institutional investors.
Predictions for Bitcoin ETF Approval
Analysts believe that the Securities and Exchange Commission (SEC) may postpone a decision on the spot Bitcoin product until early 2024, as various deadlines approach. Swan Bitcoin's CEO anticipates that multiple ETFs will be approved in 2024, leading to an influx of newcomers into the Bitcoin market. These newcomers will likely seek mature and reputable partners, like the BitGo-Swan joint venture, to fulfill their Bitcoin-related needs.
Collaboration and Unique Capabilities
The teams at BitGo and Swan Bitcoin have collaborated closely for almost a year to develop stronger qualified custody models. Recognizing the opportunity in early 2023, they decided to establish a Bitcoin-only custodian that combines the unique capabilities of each company. This partnership aims to support innovators at the forefront of driving Bitcoin adoption.
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