BitGoâ€™s status as a qualified custodian should draw more high-net-worth investors to Amber from places like Hong Kong, Taiwan and Seoul, the companies said.
The Hong Kong-based market maker, which has an average daily trading volume between $100 million and $200 million, is building on its existing business relationship with BitGo. (Amber Groupâ€™s suite of offerings, which includes Amber Pro and Amber App, have used BitGo security tech since 2018.)
Back in February, Amber closed a $28 million funding round led by Paradigm and Pantera Capital and including Coinbase Ventures. BitGo Trust clients include Pantera, Bitstamp, Nexo, CoinJar and others.
Read more: Crypto Finance Startup Amber Raises $28M in Series A Led by Pantera, Paradigm
Amberâ€™s decision was partly swayed by BitGoâ€™s $100 million in Lloydâ€™s of Londonâ€“backed cold storage insurance cover, said BitGoâ€™s Nick Carmi.
â€œThe insurance that comes with our trust custody just adds another component of security and trust for the clients â€“ and thatâ€™s why they are with us,â€ Carmi, the custodianâ€™s head of financial services, said in an interview.
Asked for his reasoning on the broadening of the firmâ€™s custody partnerships, Amber Group CEO Michael Wu said via email that it came down to the custodianâ€™s â€œtrack record, shared insurance scheme and integration with [the BitGo] lending desk.â€
Some custodians claim that deep cold storage, which involves some degree of manual processing to get the funds online, is not suitable for the sort of fast turnaround professional trading operations require.
BitGoâ€™s Carmi said the inventory immediately needed for market making and high-frequency trading can be held in hot wallets, or those connected to the internet. â€œWhatever they are not using stays in cold storage,â€ he added.
Wu could not comment on the exact breakdown of funds that sit in Amberâ€™s cold wallets at any one time.
â€œThe majority of funds are always being utilized and moved around for various trading, lending and other activities,â€ said Wu. â€œOur engagements with new custody partners are driven by business demand as the firm continues to grow.â€
Read more: Record $616M of Wrapped Bitcoin Minted in September
Amber has also been getting a taste of BitGoâ€™s wrapped bitcoin (WBTC), a tokenized version of bitcoin (BTC) primed for easy usage on Ethereumâ€™s various decentralized finance (DeFi) apps.
BitGoâ€™s Carmi said WBTC naturally flows into the institutional custody business as savvy investors hunt for yield.
â€œWe are the sole custodians and the only counterparty that can mint WBTC,â€ he said, â€œand BitGo Trust is the custodian of the BTC thatâ€™s being held for minting.â€
Wu could not comment on the volume of WBTC Amber is trading. â€œWe only began trading WBTC recently, primarily as a result of DeFi opportunities,â€ he said.