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Clearing & Settlement Service for Digital Assets

Settlement with a new level of security

BitGo is building a clearing & settlement service to address the most pressing crypto market structure issues.

  • Counterparty risk - one party must act first and rely on the counterparty’s good faith
  • Inefficient capital allocation breaking up the balance sheet in order to trade on multiple exchanges
  • Compliance infringement - funds need to leave custody in order to settle trades

As a qualified custodian, BitGo is uniquely positioned to deliver riskless, efficient, and compliant crypto trade clearing & settlement. Client assets remain secure and never leave cold storage. Trades are settled off chain via virtual journal swaps and synchronized on chain upon withdrawal.

  • Minimizing counterparty risk by locking funds during settlement
  • Virtual journal swaps facilitate trading on multiple exchanges without breaking up the balance sheet; instant settlement also becomes possible
  • Maintaining the security and compliance benefits of a regulated trust company
  • Reducing market risk by settling off chain
  • Improving operational efficiency by minimizing human error and speeding up settlement

Clearing & settlement partnership promotes trust and optionality

Having onboarded and secured funds from OTC desks, exchanges, hedge funds, broker-dealers, lenders, payment processors, and security token issuers under the regulatory compliance and security of BitGo Trust, we have laid the groundwork for building a clearing and settlement network. Participants will be able to:

  • Choose which partners to clear and settle with
  • Check the counterparty’s trading limit pre-trade
  • Customize fund locking options (e.g., limit, duration)

Various clearing & settlement options minimize integration hurdles

The clearing & settlement service is an API product complemented by a Web UI to provide integration flexibility.

01

One-sided request with counterparty affirmation One side of the trade submits clearing & settlement requests, including its own cryptographic signature on the trade details, via API calls. BitGo will notify the counterparty and lock the funds of both sides while waiting for the counterparty to affirm the clearing & settlement request via BitGo’s Web UI or API. The trade will be settled immediately upon affirmation and the lock will be released.

02

One-sided request with instant settlement One side of the trade submits clearing & settlement requests, including cryptographic signatures of both sides of the trade, via API calls. The trade will be settled instantaneously.

03

Two-sided requests with reconciliation Both sides of the trade submit clearing & settlement requests via API calls, each providing their own cryptographic signature. BitGo will reconcile trades and settle immediately upon successful reconciliation.

Initial clearing & settlement functionality supports

  • Fiat versus crypto (Bitcoin and Ethereum) trade clearing & settlement
  • One or multiple trades per clearing & settlement API request
  • API to check trading limit
  • Locking of funds while waiting for counterparty affirmation during settlement

The Clearing & Settlement Process is Overseen by BitGo Trust

All clearing & settlement parties must be qualified custody clients holding funds with BitGo Trust.

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