BitGo and Swan Bitcoin have announced plans to establish the first Bitcoin-only trust company in the United States. Pending regulatory approval, the new entity will function as a trust company, providing services such as Bitcoin custody, administration, and management on behalf of its beneficiaries. The goal of the venture is to offer Bitcoin custody without the risk associated with other altcoins.
Swan CEO Cory Klippsten stated that major clients, partners, and other Bitcoin companies have expressed a preference for a Bitcoin-only software and services stack that focuses exclusively on the best custody leveraging Bitcoin’s unique features.
While the companies are currently in talks with state regulators regarding their plans, they have not yet filed for regulatory approval. Klippsten disclosed that they are first evaluating acquisition options before proceeding.
BitGo, known for its digital asset security and custody solutions, supports over 30 cryptocurrencies. In contrast, Swan Bitcoin is solely dedicated to Bitcoin, allowing users to invest in the cryptocurrency through one-time and recurring purchases. The custody of records is held at Fortress Trust and Bakkt, with BitGo acting as a cold storage custodian.
The new venture aims to target institutional investors, including asset managers, pension plans, family offices, governments, and company treasuries. It will provide cold storage, fraud prevention, Anti-Money Laundering (AML), and Know Your Customer (KYC) protocols, among other Bitcoin-related services.
In the United States, institutional investors make up a fast-growing market within the crypto space. This is especially true as asset managers seek regulatory approval for a spot Bitcoin exchange-traded fund (ETF). Wall Street giants such as Bank of New York Mellon and Deutsche Bank already offer cryptocurrency custody solutions to institutional investors.
Swan’s CEO expressed confidence in the approval of several ETFs in 2024, which would attract new players to the Bitcoin market, seeking reputable partners for their various needs. However, the Securities and Exchange Commission (SEC) has been delaying decisions on the spot Bitcoin product, and experts predict a potential postponement until early 2024 as deadlines approach.
The collaboration between BitGo and Swan has been ongoing for nearly a year, focusing on developing stronger qualified custody models. In early 2023, they identified the opportunity to establish a Bitcoin-only custodian by combining the unique capabilities of each company and supporting innovators driving Bitcoin adoption.
The establishment of a Bitcoin-only trust company in the US would provide a specialized and secure solution for institutional investors looking to enter the Bitcoin market. As digital assets continue to gain traction, such ventures play a crucial role in expanding the accessibility and trustworthiness of cryptocurrency investments.