Blockchain software firm BitGo announced on Tuesday the launch of its new off-chain Clearing and Settlement Service for clients of qualified custodian BitGo Trust Company. According to BitGo, the Clearing and Settlement Service was designed to solve these critical issues and is offered to OTC desks, single-dealer platforms, exchanges, asset managers, and broker-dealers.
“All participants custody their digital assets with BitGo Trust Company. As a result of using a common custodian, participants will be able to choose which partners to clear and settle with, and check their trading limits pre-trade.”
BitGo’s Clearing and Settlement Service, assets remain in cold storage at all times. Trades are settled off-chain. Upon withdrawal, they are reconciled on-chain. Client benefits include:
- No counterparty risk: Funds are locked during settlement.
- Efficient capital allocation: Virtual journal swaps facilitate trading on multiple exchanges without breaking up the balance sheet; instant settlement also becomes possible.
- Regulatory compliance: Assets are held with qualified custodian BitGo Trust Company.
- Reduced market risk: Trades are settled off-chain.
- Institutional-grade security: Multi-signature security, multi-user policy controls, and advanced security configurations to meet the most rigorous industry requirements.
While sharing more details about the service, Mike Belshe, CEO of BitGo, added:
“Until now, in a digital asset trade, one party needed to assume all of the risk and act on the counterparty’s good faith, and this doesn’t really work for institutional investors. We are bringing to market a riskless, efficient, and compliant digital asset clearing and settlement, and what makes this service possible is BitGo Trust’s strong client base.”