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.

South Korean Startup That Raised 29,000 ETH via ICO Is Shutting Down

Contents Protocol Team, a South Korean cryptocurrency startup that raised over 29,300 ether via an initial coin offering (ICO) and a private token sale in 2018, is shutting down and refunding its investors.

According to the startup’s website, Contents Protocol decided to shut down and refunds its investors over a continued lack of regulatory uncertainty, and over difficulties with its own goal of collecting data from local platforms like Watcha and Watcha Play. Watcha is a Korean movie rating and recommendations service, while Watcha Play is a streaming service similar to Netflix.

The startup was looking to reward the platforms and their users with its own native token, the CPT, for the data it collected, so it could then sell the data to content providers and create a better content production ecosystem. The idea didn’t seem to work as the platform didn’t see cryptocurrencies in a favorable light. The website reads:

There were numerous difficulties in encouraging participation from content consumers because of their negative perception toward cryptocurrency, price volatility and complex user experience. It was also a challenge to bring in content platforms who would provide data to Contents Protocol.

The firm added that since its capacity to collect data was limited, it was hard to give content producers insightful data that helped them improved the ecosystem. Legal and accounting risks associated with the uncertainty surrounding crypto taxes also contributed to the firm’s fallout.

Contents Protocol detailed it’s liquidating and distributing its remaining assets to investors based on the legal opinion and advisory from law firms in both Korea and Singapore. Its assets are to be converted to ether and then distributed to CPT token holders who requested an ETH compensation.

Its initial coin offering was held in December 2018, where it raised 29,337 ETH when the cryptocurrency was trading at about $115. It currently has 26,878 ETH in its reserves which will be distributed to CPT holders following a specific ratio:

asset distribution ratioSource: Contents Protocol

According to CryptoCompare data, ether is currently trading at $281 after rising over 72.8% in the last 30 days.

Featured image via Pixabay.