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.

CoinBits Allows Users to Earn Passively By Converting, Saving Change in Bitcoin

Erik Finman, an early Bitcoin (BTC) adopter, has launched a crypto platform called CoinBits, which allows investors to passively invest in the flaghship cryptocurrency.

According to TechCrunch, Finman’s new app, CoinBits, intends to democratize access to cryptocurrency by allowing people from all walks of life to make small investments through commonly-used investment and savings strategies. These reportedly include roundups on transactions made via credit or debit card purchases.

The CoinBits app will also support conversion of fiat currency to bitcoin via regular transactions from users’ checking or savings accounts. While CoinBits has been designed to mainly benefit its users, Finman revealed that his own BTC holdings will also grow as more people use the small savings app.

No Commissions on Transactions, 98% of Bitcoins Stored Offline

As explained on CoinBits’ official website, users can invest small amounts such as $10, $25, $50, or $100 through the app’s web-based interface. The savings app also lets users adjust the risk level for their investments.

Notably, the CoinBits app does not charge transaction fees and 98% of users’ bitcoins are kept securely in cold storage (offline).

Explaining how investing in cryptocurrencies can be challenging for some people, due to their highly technical nature, Finman said:

Overall, investing in bitcoin is complicated and can feel almost impossible. CoinBits allows you to put that spare change in bitcoin. For example, if you spend $1.75 on French fries, that remaining 25 cents is invested automatically.

As noted on CoinBits’ website, the company handles withdrawals and users are charged a $0.50 fee for same-day processing. There’s also an option to download the transaction history associated with users’ accounts. This makes it easier for users to manage their finances and track how much they may have gained or lost on their bitcoin investments.

Crypto-Backed Lender Receives $25 Million in Deposits Two Weeks After Launch

As the crypto and blockchain ecosystem continues to evolve, many new startups have been offering different products and services which allow users to earn passively on their digital asset holdings. In March 2019, BlockFi Lending LLC, a New York-based “secure non-bank lender” announced it had received $25 million in cryptocurrency deposits just two weeks after launching its crypto-backed loans packages.

BlockFi’s investment packages allow users to earn interest on their Bitcoin (BTC) and Ether (ETH) investments.