On 13th September, it was announced that BitGo, a cryptocurrency company planning to devise ways to fill the gap in institutional investors, has received a state trust charter to act as a custody for cryptocurrencies. Mike Belshe, the CEO and CO-Founder of BitGo stated that:
“This is the missing piece for infrastructure — it’s a treacherous environment today. Hedge funds need it, family offices need it, they can’t participate in digital currency until they have a place to store it that’s regulated.”
The move makes BitGo the first cryptocurrency company to act as a regulated custody offering specifically for cryptocurrencies. The company has also agreed to take the same route as that of a lot of other financial companies, such as: opening itself to audits, starting the common scheme of ‘Know Your Customer’ or ‘KYC’ and monthly reveals of all the company books.
Sanford C. Bernstein & Company, an investment company has also said that:
“As the crypto-asset class seasons and institutional demand builds, there are a plethora of opportunities for traditional firms to engage in the eco-system.These include the provision of custodial and asset management services as well as traditional brokerage functions like market-making.”
The move that gives BitGo a government-backed guarantee has projected a ray of hope to users that cryptocurrencies may be en route mass adoption. Several analysts and policymakers have stated that the field of cryptocurrency is something that is mostly run by retail investors and for it to really take off, institutional investors have to come into the fore. Reports have stated that:
“Institutional investors are very interested in finding a solution, but they haven’t seen one that they think is perfect for various reasons. They still self-custody, and manage all their own keys.”
The above-mentioned report is the one that gives companies like BitGo an edge as the state trust charter instills a sense of trust and security in cryptocurrency firms. Some reports have also suggested that the company might pivot into a broker-dealer, albeit that is still in the works.
Earlier statements by experts have shown that with the coming of institutional investors into the fintech industry, the cryptosphere will boom spectacularly. With the additional assurance of protection against hacks and other nefarious activities, BitGo has allayed some fears that users have.
LeahK, a Reddi user commented:
“This is such a welcome move. I hope it is all smooth sailing from here [I know that is too much to hope lol]. Fingers crossed for better updates.”
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HitBTC responds to allegations of insolvency, refutes claims made by Redditors
HitBTC, a Hong Kong-based exchange has been the center of accusations among users on Reddit, Twitter, and other forums. HitBTC users started complaining about issues regarding withdrawal and extensive procedures after one particular user @ProofofReserach put out a thread alleging insolvency of HitBTC.
To put an end to all the accusations, HitBTC has broken its silence with a blog post explaining their side of the story. According to HitBTC, their systems performed well during the winter of 2017-18, however, HitBTC mentioned that due to overwhelming demand for the services, they experienced bottlenecks at an operational level.
Referring to the BitcoinExchangeGuide article, HitBTC responded:
“A widely quoted article, in its entirety, is based on only 2 AML cases. One of them was initiated as part of the investigation into the December, 2018 BTCP security breach, at the request of the coin’s core team. Unfortunately, there is no clear indication of the nature of the second case that can be discerned from the article. The author of the article failed to track the deposit/withdrawal dynamics that did not uncover any irregularities. A simple block explorer or our public System Monitor would suffice for these purposes”
Additionally, referring to the altcoins being added and removed from the platform, the exchange said that they were honored to work with a diverse range of projects, however, since the crypto sphere was still nascent, there were lapses in their judgment in assessing the integration partners. With the above-mentioned prominent cases, HitBTC also addressed other topics.
@ProofofResearch replied to HitBTC’s blog:
“Is there a reason why you’re unable to tell people us where your Bitcoin storage is at? If what I published is as untrue as you claim it is, then providing a wallet address where your Bitcoin funds are stored will go a long way in *proving that*.”
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