Security and transparency are at the core in crypto space. Since Hong Kong strictly warn crypto firms to protect their virtual asset, profitable opportunities for custodian firms are likely coming up. InVault, a crypto startup based in Shanghai is launching its crypto custodian services in Hong Kong. The initiative is more likely to get benefited from the SFC’s new rules. Releasing on early November, Securities and Futures Commission (SFC) in Hong Kong has issued new licensing regime that demands exchanges and fund managers to ensure their crypto assets.
Hong Kong Securities and Futures Commission (SFC) stated;
The SFC generally expects that the insurance policy would provide full coverage for virtual assets held by a Platform Operator in hot storage and a substantial coverage for those held in cold storage (for instance, 95%).
Hong Kong – A potential Region for InVault Custody Service
InVault has already reached 1 million Ethereum under custody in mainland China. Accordingly, the firm has taken up a new trust license from SFC and will begin its services from December. Since the firm becomes fully compliant with the new regulations, it predicts the firm may expand its reach across the region. With the new license, InVault will be able to offer its custodian services within the nation freely and legally.
The Rise of InVault As a Crypto Custodian Services
Since InVault has acquired the trusted license, the SCMP articles note that the Kenneth Xu, founder, and chief executive of InVault believes the trusted custodian service can offer regulated “conduit” among crypto firms and formal financial systems. Beside InVault, Coinbase and BitGo in the US are the prominent players in cryptocurrency custodian services where former works both, as crypto exchange as well as custodian firm operated under separate trust companies.
Xu also divulged that he is in talks with two “mid-sized” insurers that may provide coverage which the firm will utilize as a part of its custody services. He goes on discussing the risk factor for insurers. The article reads;
The biggest challenge for insurers today is how to accurately measure the risk profile of a custodian, and its internal systems, to price the cryptocurrency insurance premium accordingly.
Xu encourages Singapore and Hong Kong as he believes that these two nations have quite clear regulations. He expects institutional custodian services in Aisa to join these regions. On top, Singapore and Hong Kong has stronger credit rating where former has AA+ with a stable outlook and latter is rated AAA with stable outlook assigned by Standard and Poor’s business intelligence corporation.