Tag: Custody

Unchained Capital Raises $60M in Bitcoin Funding

by Blockchain News

Despite the bearish trend in the crypto market, Unchained Capital, a financial services provider for Bitcoin holders, has raised $60 million in a Series B funding round led by Valor Equity Partners. The funding round also saw participation from NYDIG, Trammell Venture Partners, Ecliptic Capital, and Highland Capital Partners.

Unchained Capital’s approach to Bitcoin custody is different from traditional centralized exchanges or single key solutions. The company uses multi-signature technology to enable clients to share control of their Bitcoin holdings between private keys they hold themselves and private keys held by Unchained or other financial services companies. This approach eliminates single points of failure and counterparty risk by sharing the control of funds between multiple parties. The multi-signature process can be compared to a safe deposit box with two keys, one held by the customer and the other by the bank.

During the 2022 crypto market crashes, centralized solutions such as BlockFi, Celsius, and Three Arrows Capital collapsed, resulting in the loss of users’ funds. This has highlighted the importance of mitigating counterparty risk and eliminating single points of failure, which can be achieved through the use of multi-signature solutions. Unchained Capital has secured over $2 billion in Bitcoin across thousands of keys globally, highlighting the growing demand for more secure custody solutions in the crypto market.

Joe Kelly, CEO of Unchained Capital, noted that multi-signature technology is one of the most important technologies in the Bitcoin ecosystem that can be taken mainstream. He explained that it helps protect individuals from loss and theft, which are two of the biggest issues in the industry. The funding from the Series B round will be used to expand Unchained’s reach and suite of services, allowing the company to enable new entrants to Bitcoin to leapfrog centralized custodians into their safer collaborative custody model.

Unchained Capital’s success in raising $60 million in Bitcoin funding highlights the growing interest in more secure and collaborative custody solutions in the crypto market. Casa, a competitor crypto security company, recently added Ethereum to its suite of products. As greater numbers of Bitcoin and crypto enthusiasts learn to take custody of their assets, multi-signature technology will undoubtedly play a greater role in ensuring their security. Ultimately, Unchained Capital hopes to further the mantra “not your keys, not your coins,” highlighting the importance of taking control of one’s assets in the crypto market.

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US Crypto Holders Trust Banks and Exchanges for Custody

by Blockchain News

A recent survey conducted by Paxos has shown that American crypto holders still trust intermediaries such as banks, crypto exchanges, and mobile payment apps to hold their digital assets. The survey, which was conducted in January, aimed to understand how the crypto winter and large industry fallouts in 2022 affected consumer behavior and confidence in the crypto ecosystem.

Despite the volatile nature of the crypto industry in 2022, including the bankruptcies of FTX and Alameda Research, the survey found that 89% of respondents still trusted intermediaries to hold their crypto assets. This is a significant finding, given the high-profile collapses and poor risk management practices seen in several crypto companies.

Interestingly, the survey also found that there was an increasing desire among consumers to buy Bitcoin, Ether, and other digital assets from traditional banks. The survey revealed that 75% of respondents were likely or very likely to purchase crypto from their primary bank if it were offered, a 12% increase from the year before. Furthermore, 45% of respondents reported they would be encouraged to invest more in crypto if there was more mainstream adoption by banks and other financial institutions.

According to Paxos, there is a significant untapped opportunity for banks if they expanded their offerings to include digital assets. Offering these services would satisfy increasing demand and result in higher engagement. However, the survey was conducted before more recent crypto headwinds, such as the bankruptcy of crypto lender Genesis, the crackdown on Binance USD (BUSD) involving Paxos, and the financial uncertainty of crypto bank Silvergate Capital.

The survey was conducted on 5,000 participants who were over 18 years old, lived in the United States, had a total household income greater than $50,000, and had purchased cryptocurrency within the last three years. Despite the volatile 2022 crypto landscape, the survey shows that consumers didn’t lose faith in their crypto investments, underlining the long-term confidence of those participating in crypto markets.

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Examiner: Celsius’ accounting and operational controls were ‘insufficient’

by Blockchain News

In the bankruptcy case involving crypto lender Celsius, the independent examiner claims that the company did not establish “adequate” accounting and operational controls in its handling of client cash. These allegations are based on the fact that the company failed to establish “adequate” accounting and operational controls. The examiner made these accusations in their report.

In an initial report that was made public on November 19 by the court that assigned Examiner Shoba Pillay the task of looking into the bitcoin loan site, Examiner Shoba Pillay brought up several critical issues concerning the site that is no longer in operation.

One of the most shocking admissions made in Pillay’s report was the fact that Celsius’ Custody programme was initiated “without proper accounting and operational controls or technological infrastructure.” This was one of the most important discoveries made in the investigation. Because of this, the corporation was able to make up for shortages in its Custody wallet with monies from its other assets.

When the Custody programme was launched on April 15, users of the Celsius platform were given the ability to transfer coins to and from one another, swap coins, and utilise coins as collateral for loans.

Because the client’s wallets were jumbled up, it is now difficult to establish which assets belonged to the customer at the time that the consumer’s bankruptcy was filed. This is because the wallets were mixed together.

The preliminary analysis has also provided light on what ultimately pushed the lending platform to suspend withdrawals on June 12th, and the reasons that decision are described in the paper. This decision was made because of the findings of the investigation.

According to Pillay, the moment that marked the turning point was on June 11, when the custodial wallets of a number of different customers ran out of cash.

By the 24th of June, this figure had dropped by an additional 24%, bringing the total amount of insufficient finance down to $50.5 million.

Celsius continued to struggle financially during the month of May, and one of the key factors contributing to this was the collapse of the Terra environment.

In addition, Celsius disclosed on November 20 that the date of its next court case is scheduled to take place on December 5. At this session, the corporation plans to further discussions over a range of topics, including its custody and withholding accounts, which will be discussed further.

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BNY Mellon Launches Crypto Custody Service – Report

by Blockchain News

Bank of New York (BNY) Mellon has announced that its digital assets custody service is now live as it seeks to deepen its foothold in the emerging cryptocurrency ecosystem. 

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Ranked amongst the oldest and most capitalized banks in the United States, BNY Mellon said the digital assets custody solution will aid its role as a major bridge between the emerging crypto world and the broader traditional financial ecosystem.  

“Touching more than 20% of the world’s investable assets, BNY Mellon has the scale to reimagine financial markets through blockchain technology and digital assets,” said Robin Vince, Chief Executive Officer and President at BNY Mellon. “We are excited to help drive the financial industry forward as we begin the next chapter in our innovation journey.”

The bank said it launched the crypto custody service by integrating the technologies of both Fireblocks and Chainalysis, noting that these firms will help it maintain the adequate security and compliance necessary to stay relevant in the highly competitive industry now and in the future. 

Arguably, BNY Mellon is positioning itself for a future that digital currencies may soon dominate. The banking giant said it commissioned a survey in which 91% of respondents who are institutional investors said they would be interested in injecting funds into tokenized products. As many as 41% of these respondents are currently holding crypto on their balance sheet, and 15% plan to acquire these assets in the near future.

With this realization, the bank said it is looking to float new products and solutions that can help it converge the needs of its traditional clients as well as those who consider crypto to be the future.

“As the world’s largest custodian, BNY Mellon is the natural provider to create a safe and secure Digital Asset Custody Platform for institutional clients,” said Caroline Butler, CEO of Custody Services at BNY Mellon. “We will continue to innovate, embrace new technology and work closely with clients to address their evolving needs.”

Besides BNY Mellon, Morgan Stanley, Goldman Sachs, and JPMorgan, amongst others, are also heavily invested in the space with their own tailored products and services hitting the market.

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No Plans to Launch Crypto Platform Yet: Nasdaq

by Blockchain News

Nasdaq plans to wait for further clarity in terms of crypto adoption globally, the company’s executive vice president and head of North American markets said.

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Tal Cohen said that the world’s second-largest stock exchange is awaiting greater regulatory clarity and institutional adoption around crypto exchanges before planning to launch a platform of its own.

“Those are discussions we are happy to have,” Cohen told Bloomberg TV on Tuesday. 

“But right now, on the retail side, the market is fairly saturated,” he added. “There’s a number of exchanges servicing the retail customer base.”

Nasdaq instead plans to stay focused on its crypto custody services. Cohen said that these services are foundational for clients, citing “massive” demand ad opportunity there.

“We think if you can safe-keep peoples’ assets, they’ll trust you to do everything else afterwards,” he said.

Cohen added that along with safe-keeping services, Nasdaq is working on facilitating the movement and transfer of the assets by building out its execution capabilities.

In September, Nasdaq announced it would offer custody services for Bitcoin and Ether to institutional investors. To do so, the firm hired Ira Auerbach, who ran prime broker services at crypto exchange Gemini, to head the new Nasdaq Digital Assets unit.

The primary target market for the Nasdaq exchange is institutional investors, as adoption has grown remarkably amongst these classes in the past few years. While accumulating crypto is one thing, safeguarding them is another, and company-owned funds are not supposed to be handled by solely one person.

According to Blockchain.News, This calls for the need for custodial services. While exchanges like Coinbase, Gemini, and Kraken are already dominating the crypto custody space for institutional investors, many believe Nasdaq is not yet late to the party.

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Bankrupt Celsius Seeks to Return $50m of Locked Crypto for Custody Holders

by Blockchain News

Celsius Network, a bankrupt crypto lending firm, on Thursday, filed to return funds to crypto custody holders who are locked out of their accounts, Bloomberg reported.

The move by the company comes ahead of a separate hearing to address ongoing questions about its efforts to restructure and resume its operations.

Celsius asked a US bankruptcy judge for permission to release about US$50 million worth of cryptocurrency stuck on the platform in so-called custody accounts, which were designed to store digital coins rather than generate returns.

A full hearing on the request is scheduled for October 6. That is according to court papers from the Bankruptcy Court for the Southern District of New York, which is overseeing the case.

The move indicates a split among the many thousands of users adversely impacted by the company’s bankruptcy.

The point is that unlike Celsius customers using its Earn or Borrow products, customers with custodial accounts still maintain ownership of their crypto assets. Celsius is just acting as the storage provider. These funds, therefore, belong to the customers, not to Celsius’ resources.

Celsius has filed for a narrow re-opening of withdrawals, stating that not every customer would be eligible.

Celsius plans to refund about US$50 million to eligible customers. That is just a fraction of the more than $200 million in locked-in custody accounts on the platform.

That is because many users shifted their holdings from interest-bearing accounts into custody arrangements shortly before the bankruptcy.

The custody accounts are also just a small group of crypto users who have not recovered from Celsius. The market value of assets in so-called earn accounts totalled about US$4.2 billion, according to court papers, as of July 10.

In July, Celsius filed for Chapter 11 bankruptcy protections after it suspended customer withdrawals, swaps, and transfers in June. Users have been unable to withdraw crypto stored in Celsius accounts.

More than 300 disgruntled customers have filed letters with the bankruptcy court to demand the return of their funds. Celsius had a total of 1.7 million customers who are collectively owed some $4.7 billion.

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Bankrupt Celsius Seeks to Return $50m of Locked Crypto

by Blockchain News

Celsius Network, a bankrupt crypto lending firm, on Thursday, filed to return funds to crypto custody holders who are locked out of their accounts.

The move by the company comes ahead of a separate hearing to address ongoing questions about its efforts to restructure and resume its operations.

Celsius asked a US bankruptcy judge for permission to release about US$50 million worth of cryptocurrency stuck on the platform in so-called custody accounts, which were designed to store digital coins rather than generate returns.

A full hearing on the request is scheduled for October 6. That is according to court papers from the Bankruptcy Court for the Southern District of New York, which is overseeing the case.

The move indicates a split among the many thousands of users adversely impacted by the company’s bankruptcy.

The point is that unlike Celsius customers using its Earn or Borrow products, customers with custodial accounts still maintain ownership of their crypto assets. Celsius is just acting as the storage provider. These funds, therefore, belong to the customers, not to Celsius’ resources.

Celsius has filed for a narrow re-opening of withdrawals, stating that not every customer would be eligible.

Celsius plans to refund about US$50 million to eligible customers. That is just a fraction of the more than $200 million in locked-in custody accounts on the platform.

That is because many users shifted their holdings from interest-bearing accounts into custody arrangements shortly before the bankruptcy.

The custody accounts are also just a small group of crypto users who have not recovered from Celsius. The market value of assets in so-called earn accounts totalled about US$4.2 billion, according to court papers, as of July 10.

In July, Celsius filed for Chapter 11 bankruptcy protections after it suspended customer withdrawals, swaps, and transfers in June. Users have been unable to withdraw crypto stored in Celsius accounts.

More than 300 disgruntled customers have filed letters with the bankruptcy court to demand the return of their funds. Celsius had a total of 1.7 million customers who are collectively owed some $4.7 billion.

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French Giant Bank BNP Paribas to Launch Crypto Custody Business

by Blockchain News

France-based BNP Paribas, the second largest global bank in Europe, has become the latest banking giant to enter the crypto custody business.

BNP Paribas announced on Tuesday that it has partnered with Swiss-based crypto infrastructure firm Metaco to enable the offering of digital assets custody services to its customers. The development was revealed by three people who are familiar with the deal.

What makes the deal significant is BNP Paribas Securities Services, the custodian subsidiary of the bank, which holds over $12 trillion under custody, is the one gearing to focus on offering institutional-grade custody for digital assets.

Expanding Institutional Digital Assets Capabilities

In recent months, Metaco formed partnership deals with several banks to develop digital asset custody platforms.

Last month, on June 30, French bank Societe Generale (GLE) selected Swiss cryptocurrency custody firm Metaco to support its digital asset custody operations. Metaco was tapped to offer digital asset custody for customers in the bank’s digital asset subsidiary, SG FORGE, which will majorly focus on security tokens.

Societe Generale now provides various capital market products to institutional clients under a native security token format on Tezos and Ethereum with whole banking level regulatory and safety compliance.

The partnership enabled SG FORGE to continue integrating security tokens into traditional finance, and leveraging Metaco’s bank-grade digital asset custody and orchestration platform, Harmonize, to further expand its offering at scale.

Also, last month, US multinational investment bank Citi selected Swiss tech firm Metaco to develop and pilot digital asset custody capabilities.

The partnership brought together Metaco’s tech and digital solutions with Citi’s custody network to develop a platform that will enable Citi clients to store and settle digital assets securely.

Citi plans to fully integrate Metaco’s bank-grade digital asset custody and orchestration platform, Harmonize, into its existing infrastructure.

The service that Metaco is offering to Citi and Societe Generale works to bridge digital and traditional assets.

With Metaco’s service, SocGen and Citi are leveraging their infrastructure to support their vision of bridging traditional and digital finance, focused on security tokens, like tokenized versions of stocks or other financial instruments, with less of an emphasis on pure cryptocurrencies.

In the past, the likes of Spanish major bank BBVA, London-based Zodia Custody, Singapore multinational bank DBS, and UnionBank Philippines also partnered with Metaco to enable digital assets custody services to their clients. 

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Virginia Senate Votes to Support New Bill by Permitting Banks to Offer Crypto Custody Services

by Blockchain News

With just a signature away, banks operating in the United States of Virginia will soon be able to offer cryptocurrency custody services.

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Based on the unanimous vote from the Virginia Senate, the proposed bill amendment introduced on January 22 this year by Delegate Christopher T. Head sought to allow eligible banks to offer cryptocurrency custody services.

The House Bill No. 263 reads:

“A bank may provide its customers with virtual currency custody services so long as the bank has 26 adequate protocols in place to effectively manage risks and comply with applicable laws.”

In tandem with a growing trend amongst key states in America to integrate digital assets into their economic operations, the Virginia lawmakers passed the proposed amendment 39:0. Following the passage of the Bill, Virginia Governor Glenn Youngkin is expected to sign to bill to make it a law in the United States.

Should the bill be signed into law, banks willing to offer crypto custody services will have to fulfil three basic requirements: the implementation of effective risk management systems, the possession of adequate insurance coverage, and the launch of an oversight program to address associated risks with cryptocurrencies.

Additionally, bank customers will be required to have full control of the private and public keys linked to their digital assets under custody.

“Acting in a fiduciary capacity, the bank shall require customers to transfer their virtual currencies to the control of the bank by creating new private keys to be held by the bank.”

Different states in the U.S. are integrating cryptocurrencies in different ways. Colorado is ramping up plans to start accepting Bitcoin and other altcoins as payment for tax and fees in the state as early as this summer. With more states beginning to realize the inherent value in digital currencies, it will not be surprising to see more states or cities announce their own unique ways of embracing these nascent asset classes.

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