Crypto custody firm Bitgo has introduced a Crypto-as-a-Service (CaaS) platform aimed at assisting financial institutions with integrating digital asset trading into their offerings. This new platform allows banks and fintech companies to seamlessly incorporate crypto capabilities using Bitgo’s wallet infrastructure and APIs.
Similar to other as-a-service platforms, the solution is designed to be modular and easy-to-use, facilitating a straightforward integration process for various financial entities.
Risk management and regulatory compliance remain top concerns for financial institutions when adopting new technologies. Bitgo’s platform includes Know Your Customer (KYC) and anti-money laundering tools and is crafted to meet banking compliance standards.
“This is significant because modular APIs reduce the need for extensive in-house development and expensive infrastructure setup,” Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, noted. “It includes regulatory compliance features and insurance coverage, allowing institutions to tailor their platform’s functionalities to clients’ specific needs, which should support quick rollout and scalability.”
FIs need to evaluate the interest and demand for crypto services among their clientele to identify opportunities best suited for BitGo’s offerings.
Increasing Interconnectedness
This development follows a trend of growing interconnectedness between traditional financial institutions and the crypto industry. Digital asset firms have started adopting functions previously reserved for banks, with companies like Bitgo, Coinbase, and Circle considering pursuing bank charters in the U.S., which would allow them to offer loans and accept deposits.
Increased Investment
With more financial institutions investing in digital asset technologies, blockchain’s efficiency and security make it a prime candidate for supporting mainstream financial services, not just cryptocurrency. Blockchain also enables tokenization of real-world assets like property deeds and stocks, streamlining manual and expensive processes.
In addition to adopting the technology, many financial institutions are acquiring or investing in crypto companies. For instance, Stripe’s stablecoin launch was facilitated by its $1.1 billion acquisition of Bridge. A notable early example is investment banking giant Goldman Sachs’ substantial investment in Bitgo seven years ago.