Recently, there was an announcement by BitGo custody platform to open up a new offering for their clients. Now, the customers can trade crypto through their BitGo account without any need to use any crypto exchanges.
Genesis Trading seems a part of this agreement is said to execute trades representing BitGo for its clients. Moreover, the BitGo users need to go to Genesis accounts for using this service. During an interview, the CEO at Genesis Trading, Michael Moro talks about this new offering.
He says that it is a novel inasmuch as it let clients trade their crypto without any requirement to shuffle their coins between cold storage and offline, which seems more secure. Also, he adds:
BitGo clients, traditionally, would have to put the coins onto an exchange. Genesis provides the quote, BitGo turns around and they can effectively segregate the coins and then send it to Genesis and since we have a wallet at BitGo they are never leaving their systems.
The head managing the products at BitGo, Tracy Olsen mentions about institutional clients’ interest boost up while they hear out regarding this new service. Moreover, they are looking forward to keeping their funds within this custody without any need to go out for exchanges.
On the other side, great exchanges like Coinbase and Binance have popular fame within this nascent crypto markets. According to Moro, there are most large traders opt while one think of executing larger trades in OTC markets. Mainly, this is due to the deep liquidity acquires on the exchange.
Meanwhile, we have seen the exchanges to be more susceptible to hacks. Also, JPMorgan’ estimation notes that one-third of all crypto exchange venues come under hacks. Sam Jernigan is basically a Co-CIO at Wakem Global Opportunities Fund, along with a macro hedge fund which trades crypto assets. He says that still, this shows the eagerness of BitGo to explore its business model as they intend to suppress the fees for crypto custody.
Just since the summer of 2018, we’ve seen the cost of custody decline anywhere between 50 and 100 basis points. As such, custody is not as big of a money maker as it was at the beginning of the year. That’s putting pressure on firms and is forcing them to move past the commodity of custody to value-add services and additional tie ups.