Fusang Investment Office, a top Asian asset management firm based out of Hong Kong, has its intentions set to launch a crypto-custody service named Fusang Vault in the 4th quarter of the year, as reported by South China Morning Post on July 23, 2018. The asset managing firm specializes in Asian private family offices.
Digital Asset Security The Top Priority
According to the local news outlet, Henry Chong, CEO of Fusang Investment Office made a statement that the proposed custody service will not only hold crypto assets on behalf of the clients but also audit the held digital assets periodically.
Chong drew a parallel between digital assets and bearer bonds, citing similar features such as the holder being the owner of the security and absence of registration of ownership information of the security held. These similarities prompted Chong to add, “Hence, the way we keep digital asset secured is of paramount importance.”
Although Chong did not reveal a lot about the proposed Fusang Vault, he did mention that the firm will partner with insurers to facilitate insurance coverage for its customer’s crypto assets.
Owing to the increasing volume of crypto-currency transactions throughout the world, it has become imperative for asset management firms to provide a robust safety mechanism to safeguard its customer’s interests, i.e., their digital assets. Asset management firms and hedge funds are actively seeking these safety mechanisms, as more transactions are conducted away from the exchanges and over-the-counter.
The absence of a Central Regulating Body Poses to be a Hurdle
As reported by BTCManager on July 5, this is not the first instance an enterprise has ventured into custody services for daily crypto trades. U.S blockchain exchange giant, Coinbase has already launched its crypto asset custodian service for institutional investors.
As per its official website, Fusang Investment Office is regulated by the Monetary Authority of Singapore and authorized by the Hong Kong Securities and Futures Commission.
However, Jolyon Ellwood-Russell, a partner at Simmons & Simmons law firm, emphasized that digital-custody services are yet to be regulated under an apex body. This implies that customer’s digital assets might be at risk if they are lost or stolen, as their only resort will be the terms and conditions agreed upon in the custodial services contract.
“Just having segregated accounts does not automatically mean that on insolvency the investor’s assets will be protected or recoverable from a receiver or liquidator.”