The cryptocurrency custody company BitGo is migrating to the prime brokerage space. Last Wednesday's announcement cited a fully integrated suite of services to serve institutional operators.
The services will be offered by BitGo Prime, a new entity which will be led by Nick Carmi, BitGo's financial services manager. Carmi joined the company last year after working in various banks and other financial institutions.
The regulated custody underlying the prime brokerage
BitGo Prime has already launched cryptocurrency lending services and plans to expand them and produce liquidity on its platform this year. Mike Belshe, CEO of BitGo, said that creating a prime brokerage in the crypto space is a difficult undertaking, at least in part, because the overall infrastructure is still relatively young.
In his view, a real prime brokerage begins with regulated custody, followed by loans and loan services. In addition, he says that the company's recent acquisition of the tax service provider Lumina may have been "the most important part" of the prime brokerage announcement.
BitGo Prime offers trading on a completely closed platform, said Belshe, which means that while BitGo knows who its customers are thanks to the application of know-your-customer / anti-money laundering measures, the outside world is not aware of which companies are negotiating on the platform. Carmi said that the services are aimed at institutional investors who are already familiar with the prime brokerage model.
The signs of a crossover between digital and traditional finance
The company has been working on brokerage services for some years, said Carmi. The current launch phase of BitGo Prime is aimed at aggregating "more reliable counterparts, market makers and exchanges".
Belshe admitted that the company is now aiming to attract more economically conservative customers. This should happen as the company builds its infrastructure and improves space regulations.
"I think we are starting to see some good signs of a possible crossover." Belshe said that the interest of those who invested in traditional assets has increased. The recent announcement by investor Paul Tudor Jones about his choice of invest in bitcoin it had a "huge effect for the sector".
The bank exchanges of JPMorgan Gemini and Coinbase are another positive sign for the sector and BitGo itself has recently contacted some investment banks, he said without naming. BitGo is not the only company to perceive this trend: Genesis Trading, Bequant and Coinbase have recently announced their intention to offer prime brokerage services.
And although Belshe believes that "it will take a long time" to bring more conservative customers into the crypto space, current events are reinforcing the concept of bitcoin as a safe haven, he said, referring to the economic fallout of the pandemic. by COVID-19.
