Fusang Investment Office, a Hong Kong-based provider of asset management service to affluent families and individuals in Asia, will set up a new venture to provide custody services for cryptocurrency-denominated assets managed by institutional investors.
The new business unit, dubbed Fusang Vault, combines Fusang’s expertise from asset administration with digital asset security, in a bid to provide a safekeeping service for investment houses looking to gain exposure to the rapidly emerging asset class.
In simple terms, a custodian is a financial institution that holds assets, in both electronic and physical forms, on behalf of its clients to ensure that they are kept safe and secure. In the blockchain space, a custodian service does the same thing but exclusively for crypto assets such as digital currencies and tokens.
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“Digital assets are akin to bearer bonds, whereby whoever that is holding the security is presumed to be the owner and there is no registration of ownership information of the security. Hence, the way we keep digital asset secured is of paramount importance,” said Fusang CEO Henry Chong.
He says the venture will provide infrastructure and an operational framework to the wider investment management industry and enable investors to embed a consistent set of best practice standards within their businesses.
Coinbase, Nomura and SIX Group launch their own custodianship
Fusang Vault, however, is not the only company providing infrastructure and operational cryptocurrency custodianship for the wider investment management industry. Leading cryptocurrency exchange Coinbase, Japanese financial holdings company Nomura and most recently SIX Group, the owner of SIX Swiss Exchange (SIX), have recently launched dedicated offerings of cryptocurrency custodianship to institutional investors.
The ventures were established to overcome barriers that have blocked institutional investment in digital assets and minimize the risk of loss due to theft or operational errors.