The goal of creating a BTC-only trust organization is to provide custody without exposing customers to the rest of the digital asset market, according to cryptocurrency custodian BitGo and bitcoin financial services provider Swan.BitGo’s custodial capabilities and Swan’s knowledge of onboarding and fraud protection will be combined in the joint venture, which is pending regulatory approval.According to a press release on Thursday night, it would be the first Bitcoin-only trust organization in the US.
“We believe the best model for the Bitcoin industry is the same battle-tested model that has been part of the U.S. financial industry for over a century: the separation of exchange and custody,” BitGo CEO Mike Belshe said.
Swan has employed BitGo as one of its bitcoin custodians, along with the Nevada-based chartered trust company Fortress Trust and the Ripple-acquired Fortress Trust.In July, shortly after BitGo scrapped plans to acquire it, crypto custodian Prime Trust was placed into receivership.The firm lost $8 million on an investment in the terraUSD algorithmic stablecoin, which failed in May 2022, according to information provided in a court filing in August by Prime Trust CEO Jor Law.
Addressing that deal, Swan CEO Cory Klippsten said Swan is already working to move compliance and settlement to another partner. “We’ve been integrating with Bakkt since early 2023 and we’ve already begun transferring some customer segments over.”
“It’s important to us to build a custodian without the risks of securing many altcoins within the same trust company as bitcoin,” Klippsten said.
Prime Trust, a cryptocurrency custodian, was placed into receivership in July, not long after BitGo decided against buying it.In a court filing in August, Prime Trust CEO Jor Law said that the company had lost $8 million on an investment in the terraUSD algorithmic stablecoin, which failed in May 2022.After abandoning its purchase of Prime Trust, BitGo obtained $100 million in investment at a $1.75 billion value.