In a development that flew under the radar of most, an American blockchain startup has just received the go-ahead from a U.S. state regulator to establish a digital asset custody product. The firm’s CEO then took to CNBC to convey details about this product and what it means for this budding industry.
The BitGo Crypto Custody Product Might Have Been The Signal Institutions Wanted
On Thursday morning, CNBC revealed that BitGo, a California-based cryptocurrency infrastructure firm, had received formal approval from South Dakota regulators to establish a custody solution. Later that day, Mike Belshe, the CEO of BitGo, took some time to sit down with CNBC’s Fast Money panel to discuss this development and the current institutional space surrounding crypto assets in general.
— CNBC’s Fast Money (@CNBCFastMoney) September 13, 2018
Opening the segment, CNBC host Mellisa Lee queried the BitGo executive about if there is interest for institutional-focused crypto-related products. Responding, Belshe stated:
“Well, it has been ongoing for the past couple of years now, as traditional finance has started to get engaged with cryptocurrency as the market has grown and shown that it has real promise. For the future, the interest will continue to grow, so it’s everywhere.”
The cryptocurrency proponent went on to add that BitGo’s custody offering will likely see its initial business come from hedge funds, family office and wealth management firms, who “are all looking for [custody] solutions.” Interestingly enough, the CEO noted that this industry would have been “much farther along” if there were reliable institutional products two years ago, as such services would have sped up the maturation of this space.
Likely referencing his experience as the head of a digital asset investment fund, BKCM CEO Brian Kelly, asked the BitGo CEO about his upcoming custody offering, specifically regarding the speed of withdrawals requested. Turning the question on its head, Belshe stated:
“So BitGo has been servicing wallets for hundreds of exchanges globally for the last five years, as one of the oldest players in the space. So we can marry combinations of hot storage and cold storage. [But] a cold storage is key to be slow actually, you do not want to move a billion dollars overnight. So if anybody’s telling you to move it very quickly, you got to wonder what are they doing behind the scenes to keep [their crypto holdings] safe. “
The industry veteran brings up an interesting point about custody services and cold storage solutions, as the rapid withdrawal of in-custody crypto assets may indicate that the security measures enlisted by the custodian are lackluster and full of holes, rather than secure. Belshe then pointed out that a lack of well-established custodians has been a barrier for institutions to get in, as these firms are regulatory-bound to enlist the use of a proper custodial solution, stating that these services “have to exist.”
The host wrapped up CNBC’s coverage of the crypto market by directing an age-old question at Kelly, asking the cryptocurrency trader “if Bitcoin needs Wall Street more than Wall Street needs Bitcoin.” The BKCM CEO, who has become a well-known, yet somewhat infamous CNBC contributor to the cryptocurrency community, somewhat echoed Belshe’s statements, noting:
“What Bitcoin needs is fresh capital coming in, so we haven’t seen a lot of new buyers coming in. So to the extent that Wall Street represents that, yes, Bitcoin needs that, and I can tell you anecdotally that the institutional herd is starting to move their feet a little bit, but they have been taking much longer than I expected… This [custody product] is making me much more optimistic, and this [may be] the solution [that institutional investors have been waiting for].”
Featured Image from Shutterstock
The post BitGo CEO: Bitcoin Needs Fresh Capital, Wall Street is Coming in appeared first on NewsBTC.