Fusang Investment Office in Hong Kong has announced plans to launch cryptocurrency custody services. The company says it will start offering the services in the fourth quarter of 2018.
Increase in demand for custodial services
There has been a high demand for cryptocurrencies. This has in turn led to a rise in demand for other related services. Demand for cryptocurrecies custodial services has been especially on the rise. The increase has been more noticeable among wealthy individuals and institutional investors.
Fusang Investment Office is capitalizing on this demand to expand its hold on the cryptocurrency industry. In the past, there have been a lot of challenges in offering these services. This is because of regulatory uncertainties that according to analysts, is holding the industry back. However, there has emerged as group of Asian countries that have crypto-friendly policies. Many of these countries are continually viewing cryptocurrency as a healthy competitor to the traditional financial system.
According to Henry Chong, the company’s CEO, the Fusang Vault will be used to hold cryptocurrencies for customers. He also said that the facility will offer periodic audits to its clients.
Chong says like in the case of financial bonds, there has been a growing demand for a third independent party who can hold the digital assets. Chong noted that crypto-custodial services are of great importance given the fact that digital assets do not have information about ownership.
How safe are the custodial services in an unregulated industry?
In what could be termed as dissenting voices however, Jolyon Ellwood-Russell, partner at law firm Simmons & Simmons says the safety of crypto-custody services depends on the trustworthy and goodwill of the parties involved. He says that because the service is not regulated, parties have to depend on the terms of the custodian services contract in the event that a user’s crypto funds are lost or stolen. He says that in addition to this challenge, there are several other issues that are yet to be address for the service to be fully reliable. One of the issues that he raised is whether custodial service providers hold digital assets as a trust.
