European and Asian Central Securities Depositories (CSDs) are Entertaining Crypto Asset Custodial Services
Crypto custody is always a very hot issue. Why? Mostly it is widely controversial, as some people believe that only the crypto owner should hold their funds while others believe that companies should do it and they ask them to be very careful because of this.
With so many exchanges being hacked all the time, the question is very pertinent: how to solve this issue?
Now, a group of central securities depositories (CSDs) comprised of about 30 companies from Europe and Asia are starting to analyze the area in order to define new solutions that will help these companies in order to collaborate on keeping the assets of their customers.
While the group is still in the early phase of an exploratory effort, the companies are planning to present their findings in October, at the annual SIBOS conference, which is set to happen in London.
These are institutions which are guarding stocks and other valuable assets for decades and they have plenty of experience in the area. As you may lose your funds forever in case you lose your private keys, they know that there is a huge market to be explored in this area.
The tokenization of assets will make this emergent market even more important in the future so the companies are already thinking of the best ways to monetize this. According to Artem Duvanov, head of innovation at the National Settlement Depository os Moscow, this new world will disrupt the job that the companies have and they decided to participate in the revolution.
According to him, the partnership was started last year and the group has doubled its size since then. The group intends to create a “common vision” for the storage of these new virtual assets.
Banks To Be Together With Custodian Companies
Some large custodian banks are also set to be involved in the next phase of the business, as it was affirmed by Walter Verbeke, the global head of business model and innovation of the Euroclear Group, which works in this area.
According to him, banks like Standard Chartered, Deutsche Bank, BNP Paribas, and HSBC will certainly be members of the consortium and they will help these companies with the storage of these assets.
Other banks which were stated to be participating are State Street, Standard Bank, and Credit Suisse, but none of them actually confirmed this.
The main idea of this plan is that the banks would help the CSDs in order to provide an independent safekeeping service for the private keys that will be used in order to secure the money.
According to Verbeke, the banks would need to decide in a collective way how to secure these private keys physically. With more banks in the partnership, the more secure the system would be and the clients would finally have a really secure option for safekeeping their digital assets in a way that they would not be hacked by anyone.
European And Asian Companies Lead The Way
While a lot of European and Asian CSDs are very interested in the subject, their peers in America and other places such as Australia are more slow to reach the same conclusion. Most of the companies from these countries are more interested in cost savings related to the distributed ledger technology and not so concerned with custody yet.
Duvanov has affirmed to the crypto media that the Australian Securities Exchange would not agree with them that tokenization will play such a big role in the future of finances, which is something that all these companies believe.
While some companies have different approaches to it, Duvanov believes that all of them at least have the same end goal, which is to be in front of the revolution in the storage of digital assets and lead this industry.
Also important to notice that the CSDs from the European Union have more incentives to pursue custody solutions that work well since the EU regulates financial instruments in a different way than the United States.
Now, we will have to follow these companies until they release their official reports at the end of the year to discover how the future of the custody market will be. One aspect is certain: things are going to change.
With so many crypto exchanges being hacked and powerful players entering the game, it is a certainty that companies that are creative and disruptive will take the lead in the revolution.