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.

Libra Association Moves Forward Despite Loss of Seven Important Member Organizations

Siamak Masnavi

On Monday (October 14), the Libra Association held an important meeting in Geneva, Switzerland in order to establish a formal governance structure. This article presents the highlights of this meeting. 

On June 18, when Facebook first officially introduced Libra, we were told that the Libra Association is an independent not-for-profit membership organization headquartered in Geneva, Switzerland and that there were 28 founding members ("a group of diverse organizations from around the world").

However, ever since then, there has been heavy regulatory pressure on Facebook and the Libra Association, especially in Unites States, where Congress has been highly reluctant to trust Facebook with something as important as a new global digital currency.

This has resulted in seven of the initial 28 member organizations dropping out of the Facebook-led project over the past two weeks. As CryptoGlobe reported yesterday, the first founding member to quit was PayPal on October 4. Then, five more—Visa, Mastercard, eBay, Stripe, and Mercado Pago—defected a week later. And then yesterday, we found out that Booking Holdings, the leader in online travel (owner and operator of some of the world's top travel websites, including Booking.com, Priceline.com, and Kayak.com), had became the seventh company to withdraw from the Libra Association.

Well, yesterday, the Libra Association did something to show the world that it might be down but not out. 

According to the Libra Association's press release, during a meeting in Geneva, Switzerland, the remaining members of the Libra Association, one of which is Calibra (the subsidiary of Facebook that is building a wallet for Libra), "formally signed onto the Libra Association charter, formalized the Libra Association council, elected the Board of Directors, and appointed members of the Libra Association executive team."

These 21 organizations are the initial members of the Libra Council, which has the responsibility of governing the Libra Association.

The Libra Council has appointed a board of directors, the members of which are:

  • Matthew Davie (Kiva Microfunds);
  • Patrick Ellis (PayU);
  • Katie Haun (Andreessen Horowitz);
  • David Marcus (Calibra, Inc.); and
  • Wences Casares (Xapo Holdings Limited)

The board of directors then agreed on the initial staff for the Association:

  • Chief Operating Officer and (interim) Managing Director: Bertrand Perez
  • Head of Policy and Communications: Dante Disparte
  • Head of Business Development: Kurt Hemecker

The Libra Association says that over 1500 "entities" have expressed their interest in joining the Libra project, around 180 of which meet the "preliminary membership criteria".

Following yesterday's meeting, David Marcus, a co-creator of Libra and the Head of the Calibra project, had this to say on Twitter:

 

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