Cryptocurrency custodians are third parties that store large amounts of digital assets for institutions, hedge funds, exchanges and issuers of initial coin offerings. Companies in Hong Kong now have a new locally regulated option, which could help to increase investor confidence.
Keep Your Holdings In a Vault at Invault
Invault, a Shanghai-based startup, has secured a new trust license from the Hong Kong financial regulator to act as a digital custodian in the Chinese special administrative region. It plans to begin offering automated cryptocurrency custodial services in December. It is also said to be in talks with a couple of “mid-sized” insurance companies to possibly add their coverage to its services.
The Securities and Futures Commission of Hong Kong recently introduced a new regulatory framework for the local cryptocurrency industry, including exchanges, asset portfolio managers, intermediaries and fund distributors. Among other requirements, licensed asset fund mangers need to choose to keep clients’ funds at a custodian, an exchange or in cold storage. This is the niche Invault is now stepping into, storing the private keys for clients’ wallets in a physical vault.
Storing 1 Million ETH in Mainland China
Invault is backed by venture capital fund Matrix Partners China, which contributed $5.85 million in seed funding earlier this year. The startup reportedly already has a staff of over 40 in Shanghai and holds 1 million ETH under custody for mainland Chinese clients.
“We believe that globally, custodians for cryptocurrency assets will be regulated and operated under a trust license,” Invault founder and CEO Kenneth Xu told the South China Morning Post. He also predicts that most of the demand for institutional custodian services in Asia will come from Hong Kong and Singapore.
Last month the New York State Department of Financial Services granted a license to a subsidiary of Coinbase to operate as an independent qualified custodian for six cryptocurrencies. And earlier this year financial analysts warned that a lack of institutional custodians is a significant barrier to investment in the field.
Would cryptocurrency users feel safer to work with companies that keep their holdings with a custodian? Share your thoughts in the comments section below.
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