Digital asset finance firm BitGo announced the launch of its off-chain clearance and settlement service in a press release published on May 14.
Per the announcement, the service will be available to clients of qualified custodian BitGo Trust Company, and assets are not moved from custody while reportedly allowing fast, compliant and secure settlement. The company explains that — since the funds never leave the custodian’s wallet — this method eliminates counterparty risk:
“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.”
Furthermore, BitGo highlights that this method does not require moving assets from cold storage, which has a positive impact on security. Lastly, the company notes that after the settlement is complete, the crypto assets are redeemable on-chain.
As Cointelegraph reported in April, BitGo has gained a further security certification from an external auditor after a review of its compliance.
In March, the United States Securities and Exchange Commission called for industry input as it is potentially reconsidering existing custody rules in specific cases of digital asset trading and settlement.