The Amber Group in Hong Kong depends on BitGo belief of their seek for institutional buyers


Crypto market maker Amber Group will serve its institutional trader clients with the help of BitGo Trust, the custodian of the Palo Alto-based financial services company for digital assets.

BitGo's status as a qualified custodian should attract more wealthy investors to Amber from countries like Hong Kong, Taiwan and Seoul.

The Hong Kong-based market maker, with an average daily trading volume of between $ 100 million and $ 200 million, builds on its existing relationship with BitGo. (The Amber Group offering suite, which includes Amber Pro and Amber App, has been using BitGo security technology since 2018.)

Back in February, Amber closed a $ 28 million financing round led by Paradigm and Pantera Capital including Coinbase Ventures. BitGo Trust clients include Pantera, Bitstamp, Nexo, CoinJar and others.

Continue reading: Crypto Finance startup Amber raises $ 28 million in Series A, led by Pantera, Paradigm

BitGo's Nick Carmi said Amber's decision was partially influenced by BitGo's $ 100 million in cold store insurance, backed by Lloyd's of London.

"The insurance that comes with our custody just adds one more component of security and confidence to customers – and that's why they're with us," said Carmi, head of financial services at the custodian, in an interview.

Michael Wu, CEO of Amber Group, asked about his considerations on expanding the company's custody partnerships and said via email that this was due to the custodian's "track record, shared insurance system and integration with (BitGo) lending desk".

Fast storage?

Some custodians claim that deep cold storage, which requires a certain amount of manual processing to put funds online, is not suitable for the fast turnaround that professional trades require.

BitGo's Carmi says that inventory needed immediately for market making and high frequency trading can be kept in hot wallets or those that are connected to the internet. "Whatever they don't use stays in the cold store," he added.

At no point was Wu able to comment on the exact breakdown of the funds in Bernstein's cold wallets.

"Most of the funds are always used and moved for various trading, credit and other activities," said Wu. "Our collaboration with new depot partners will be driven by business demand as the company continues to grow."

Continue reading: Record of $ 616 million for wrapped bitcoin minted in September

Amber also got a taste of BitGo's Wrapped Bitcoin (WBTC), a token version of Bitcoin (BTC) prepared for easy use in Ethereum's various Decentralized Finance (DeFi) apps.

According to BitGo's Carmi, WBTC naturally flows into the institutional custody business as savvy investors look for returns.

"We are the sole custodians and the only counterparty that can mint WBTC," he said, "and BitGo Trust is BTC's custodian held for minting."

Wu was unable to comment on the volume of WBTC trading in Amber. "We only recently started trading WBTC, largely due to DeFi opportunities," he said.


Melinda Martin