Core to the debate is the safeguarding of assets similar to the way banks holds cash and electronic deposits. Firms are now adding features to entice new investor clients including real-time cold storage, building to Government and Banking security standards, reducing human processes that can compromise the security of moving assets in and out of traditional systems.
I recently interviewed Martin Gymer CEO of Custodiex who has developed and built a unique cyber-security solution that has the potential to help revolutionise the storage of digital assets by building "Trust in a trustless world" and is now starting to see the digital elite from the across the globe seek out this slick and state of the art facility.
Martin has a tenured career within investment banking when four and half years ago Bitcoin was placed firmly onto his radar which leads him to the problem private and public institutions face of what could happen if the vault you were using gets hacked?
"The thought of waking up one morning, only to discover that the exchange or vault I used had been hacked, and all the account balances were zero. With no ultra-secure, trusted storage options available, and with my background incomplex risk products from a 25-year career in investment banking"
Investing in security
When you dig into Custodiex's unique offering you are instantly reassured by the layers of digital and physical security measures the provider has invested in to achieve Martin's mantra-like approach to security - "defence-in-depth'. The air-gapped cold storage servers are located in two decommissioned nuclear bunkers which have all the mod cons you would expect from Faraday cages, three meters thick concrete walls, and ex-military security personnel to ensure the company can really boast to be one of the most secure sites in the world.
Vaults not Wallets
In an age of cryptocurrencies and the supporting exchanges your average customer is used to the idea of an e-wallet, I asked the tech-savvy CEO why he has made the conscious decision to move away from this widely known term.
"The phrase 'wallet,' which refers to a software store for a specific type of Crypto-asset. Instead, we use the term “Vault.” A Vault can store any asset class. Each Vault has a customer-defined policy that specifies who can initiate key usage, approve key usage, and who is billed for the Vault service”.
What can you store in your personal vault?
Custodiex has managed to keep the process of moving any type of digital asset into your vault easy, efficient and most importantly you can insure any product you place in your vault. In the first instance, customers will need to transfer ownership of the asset from their Private Key to Custodiex's private key they generate in realtime on-site from their secure facility. When you speak to Martin you get the distinct impression he has founded the facility to be "asset agnostic" and can store anything from provenance and sales proceeds of fine art, through to storage of Bitcoin and Ethereum funds.
Recent exits suggest Custodiex have something special
If you follow this sector you may have noted that New York powerhouse the Winklevoss Twins Cameron and Tyler branched into the custody sector with a secure vault offering providing investment clients with enhanced functionality. The key advance was being able to offer investors the opportunity to provide instant liquidity bypassing the biggest clients pain point of waiting for hours to receive verification and other procedures needed to retrieve assets from "cold storage" offline.
Custodiex is evening out the playing field in their ability to move assets quickly and securely within their custodian process, "In my experience sometimes clients need liquidity quickly to make a 'hot' trade and we need to be able to meet this demand for our clients"
What I think is really interesting is that we are starting to see the cryptocurrency markets develop their own back-office operations to meet demand and support the steady increase in trading in digital assets. Until now this has been the remit off the big institutional banks to help support trades behind the scenes.
