Industry Hurdles – Custodianship
In under two years, the state of custodianship within blockchain has grown by leaps and bounds. A mere eighteen months ago publications were posting about ‘The sad state of crypto custody’. Six months after that, custody solutions were noted as a rapidly developing innovation within the industry.
A major driving factor behind the development seen, with regards to custodianship, is due to the narrative of ‘institutional capital’ entering the world of crypto. If this is to occur, they will require trusted companies to provide this service.
Today, various companies which recognized the lack of solutions in the industry have launched, and established beginning levels of adoption. The following are a few of these companies, and what they are bringing to the table.
In a recent, and promising, bit of news, payment processing giant, VISA, Blockchain Capital, and others, invested $40 million USD into a blockchain based custodial solution – Anchorage. This raise represented a Series B, with the company previously raising $16 million in their Series A mere months ago.
This young, promising, company has taken a different approach to providing a safe haven for digital assets. Rather than using passwords and usernames, the platform relies on a mix of human and artificial intelligence to verify transactions on whitelisted devices.
Anchorage has stated that, in time, their platform will support all forms of digital assets. This versatility, and interest in the sector shown by companies like VISA, points to a bright future.
One of the most anticipated digital securities exchange launches of 2019, is the upcoming Archax Exchange. With a projected launch in Q4 of 2019, it is imperative for Archax to establish all of the necessary partnerships and services sooner than later. The latest puzzle piece to fall in to place would be the decision to utilize custodial services, offered by Unbound Tech.
Unbound Tech, which operates out of New York, has developed a DLT based platform which breaks up and stores data among various parties. This is done with the intention of eliminating a single point of weakness within a storage network. No doubt, their innovative, and polished, platform led to this strategic partnership.
The rise of digital securities has also resulted in the rise of numerous issuance platforms. In order to remain appealing to their clients, each of these platforms must either offer their clients direct access to a custodial service, or redirect them to a third party.
One of the most promising issuance platforms, SWARM, has experienced better adoption than most, to date. Not offering any ‘in-house’ custodial service, SWARM established a strategic partnership with U.K. based, Copper.
Copper provides institutional grade custodianship through the use of a practice called ‘air-gapping’. This simply refers to the practice of ensuring their cold storage devices are, not only not connected to the internet, but not connected to any other device which maintains an internet connection.
Upon establishing their alliance, SWARM Cofounder Philipp Pieper, had high praise for Copper. He stated, “The integration between Copper and SWARM is a great fit due to the compatibility of our technologies as well as our teams…Copper provides the level of institutional grade security and convenience that is absolutely essential for the adoption of digital securities by institutional investors and retail market,”
Love them or hate them, Coinbase remains at the forefront of the blockchain industry. This means that when their custodial solution, ‘Coinbase Custody’ announced support for their first digital security, it represented an important step.
The reason this step is an important one can be broken down various ways, but is primarily positive, due to the increased exposure which Coinbase will afford the nascent digital securities sector. Most participants in the world of blockchain are well versed in ICOs, but have not necessarily been exposed to STOs and DSOs. Support of assets issued through these capital generation events, by an industry leader, is most definitely a step forward.
Carlos Domingo, CEO of Securitize, tweeted at the time of this announcement.
— Carlos Domingo (@carlosdomingo) June 5, 2019
TokenSoft Knox Wallet
TokenSoft has been one of the busiest companies within the digital securities sector throughout 2019. One of their various steps forward, came through their various custodial solutions for clientele. While the company has formed an alliance with Coinbase Custody, TokenSoft has developed their own solution for those interested.
‘Knox Wallet’ is the name of this offering. It is a mobile custody solution, which brings full support for various digital security protocols.
- Harbor R-Token
- Polymath ST-20
- Securitize DS-20
Knox provides its users with security through the use of various tactics. These include cold storage, role-based access control, and cryptographic authentications.
While Knox remains in beta, it has the potential to become a key player in the digital securities sector. It remains one of the only mobile based custody solution to support the asset class.
An entire subset of the blockchain industry was essentially birthed from nothing, in less than two years. It has since grown into a promising grouping of service providers. While time and development move slowly in the moment, reflecting on growth within blockchain shows fantastic speed of development, wherever you look.
The companies discussed here today are essentially writing the custodial solution blueprint on the fly. As these industry trailblazers demonstrate what works, and what doesn’t, we should continue to see increasingly polished solutions presented. One such example may prove to be the upcoming Facebook project, Calibra.
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