Hong Kong Firm to Launch Crypto Custody Services to Meet Institutional Investor Demand

Omar Faridi
  • Hong Kong and Singapore-licensed Fusang Investment Office will soon offer crypto custodial services.
  • Fusang Investment CEO Henry Chong stated that “the way we keep digital assets secure is of paramount importance.”

Fusang Investment Office, an asset management firm serving private Asian family businesses, will reportedly launch cryptocurrency custodial services for in Hong Kong. The service will be called Fusang Vault, and it’s expected to be introduced in Q4 2018.

Fusang Investment CEO Henry Chong stated that partnering with an independent third party specializing in the crypto sector was required in order to offer the crypto-custody services, as it will need to hold and periodically audit clients’ digital assets.

The University of Oxford graduate noted that his company was planning on providing insurance services for its customers’ crypto assets. Speaking to the South China Morning Post, Chong said:

Digital assets are akin to bearer bonds, whereby whoever that is holding the security is presumed to be the owner and there is no registration of ownership information of the security. Hence, the way we keep digital asset secured is of paramount importance.

Henry Chong

Meanwhile, Jolyon Ellwood-Russell, partner at law firm Simmons & Simmons, said that crypto-custody services were not yet regulated. This means that if a user’s crypto funds are lost or stolen, then they will have to rely on only the terms and conditions of their custodian services contract.

He also stated that there were several issues not addressed in the custodial services contract:

For example, in what capacity are the custodians holding the assets? Are they holding them as a bailment, that is, a trust, so the assets are outside the estate of the custodian on an insolvency. Just having segregated accounts does not automatically mean that on an insolvency the investors assets will be protected or recoverable from a receiver or liquidator.”

Jolyon Ellwood-Russell

Institutional Investor Demand

Despite Jolyon’s skepticism regarding custodial services for digital assets, several crypto companies already offer them. Notably, institutional investors have been “waiting on the sidelines” when it comes to cryptos, partly because of a lack of custodial services.

San Francisco-based cryptocurrency exchange Coinbase recently launched custodial services for cryptocurrencies in an attempt to tackle the problem. The company revealed their new service helps safeguard their clients’ assets by requiring multiple signers for all transactions.

The exchange’s crypto custody services also help customers keep their digital funds safe by setting withdrawal limits and providing audit trails. As recently covered, billionaire investor Mike Novogratz believes a “herd of institutional investors” is starting to move into crypto.

Facebook Libra Cryptocurrency Unveiled; Yet Another Ban for U.S. Crypto Investors

The top daily news from the cryptocurrency and blockchain space:

  • Social media giant Facebook introduces Libra cryptocurrency, Libra Blockchain, and Calibra.
  • Multiple regulators voice concern over Libra and Libra Blockchain.
  • Bancor bans U.S. users from its web application.

At the time of writing, bitcoin (BTC) and ether (ETH) are trading at $9,169.6 (+0.1%) and $267.7 (-0.3%), respectively. As for the MVIS CryptoCompare Digital Assets 10 Index, it is currently tracking at 4,283.8 (+1.8%).

Bitcoin Ethereum CryptoCompare

Facebook Libra Cryptocurrency, Calibra Unveiled

Facebook announced its plans to roll out a new price-stable cryptocurrency called Libra. Libra is governed by a Geneva-based not-for-profit entity known as Libra Association. While Libra will start out running atop a public-permissioned blockchain, it will, over time, transition to a public-permissionless blockchain.

The Libra Blockchain was described as follows: "a decentralized, programmable database designed to support a low-volatility cryptocurrency that will have the ability to serve as an efficient medium of exchange for billions of people around the world."

French, U.S. Regulators Decry Facebook Libra Cryptocurrency

Just hours after Facebook’s announcements relating to Calibra and Libra, French finance minister Bruno Le Maire called for the Group of Seven (G7) central bank governors to review Facebook’s Libra token, alleging it cannot and “must not happen.”

Soon after this, Patrick McHenry (R-NC), the senior Republican on the U.S. House Financial Services Committee, penned a letter to Chairwoman Maxine Waters (D-CA) requesting a hearing on Facebook’s new cryptocurrency project. Waters later voiced her agreement; requesting Facebook agree to a moratorium on the development of Libra.

Also voicing their discontent with the yet-to-be-launched blockchain initiative by Libra was U.S. Senator Sherrod Brown (D-OH), the Ranking Member of the Senate Banking Committee, who tweeted his opinion that the U.S. government “cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight.”

U.S. Users Banned from Bancor Web App

Bancor – a decentralized liquidity network that provides users with a simple, low-cost way to buy and sell cryptoassets directly through their wallets – announced that “beginning July 8, 2019 (09:00 AM EST) US citizens, domicilaries or users from US IPs (Internet Protocol addresses) will no longer be able to use Bancor’s web application, bancor.network, to convert tokens.” All other functionalities will remain available, Bancor confirmed.

Addressing what led Bancor to enforce this restriction on U.S.-based users, the company said that the “decision has been made in light of increased regulatory uncertainty” in the U.S. The move is largely similar to that of Binance's, which recently banned IP addresses from the U.S. – along with twenty-eight other countries – from accessing Binance.org, the primary gateway to Binance DEX.