#What is BitGo Bank & Trust's role in custody for YLDS?
BitGo Holdings, listed on the NYSE under the ticker BTGO, recently announced that its subsidiary, BitGo Bank & Trust, which is regulated by the OCC, has initiated qualified custody services for YLDS. This is noteworthy as YLDS marks the first SEC-registered yield-bearing digital security in the market. The product, introduced by Figure Certificate Company—part of Figure Technology Solutions—debuted on February 20, 2025.
Designed as a tokenized face-amount certificate, YLDS represents an unsecured obligation pegged to the dollar. It generates daily yields calculated at the Secured Overnight Financing Rate minus 35 basis points, amounting to approximately 3.27% as of now. Investors receive monthly returns either in traditional USD or in additional YLDS tokens. Notably, there are no staking or lock-up stipulations, and transfers can be conducted directly between peers.
#Why is qualified custody crucial for institutional investors?
Qualified custody plays a vital role for institutional allocators, as it establishes a necessary framework for holding assets like YLDS. Without the proper custodial infrastructure, even sophisticated digital securities can remain unutilized by professional money managers due to regulatory constraints. As an OCC-regulated trust company, BitGo Bank & Trust adheres to qualified custodian standards, facilitating approval from compliance departments of institutional investors.
#What protections does BitGo Bank & Trust offer?
BitGo enhances its qualified custody service with a robust $250 million insurance policy that covers digital assets. This insurance works hand-in-hand with OCC regulations and secure offline key management to fulfill the criteria compliance departments use when assessing custodial arrangements, thus reducing risk for institutional clients.
#How does YLDS fit within the broader financial infrastructure?
Figure Technology Solutions has performed over $23 billion in on-chain loans, primarily utilizing the Provenance Blockchain. The introduction of YLDS represents an extension of this infrastructure into yield-bearing securities. This advancement is particularly significant for registered investment advisors.
#What opportunities does this create for registered investment advisors?
For registered investment advisors, BitGo Bank & Trust's support of YLDS unlocks new opportunities. Advisors operating under SEC or state regulations face fiduciary responsibilities that necessitate qualified custody of client assets. With the backing of BitGo Bank & Trust, these advisors can now diversify portfolios by incorporating a yield-bearing on-chain product into client investments without non-compliance issues related to custody.