The Fusang Investment Office would be launching its own crypto-custody service soon, according to a recent report by South China Morning Post, a Hong-Kong based news outlet for English readers.
Fusang Vaults, which is a custody service focusing on private family offices, would now hold digital assets for clients, according to the company’s CEO Henry Chong. The office would also be providing periodic audits. The service’s launch has been scheduled for the last quarter of 2018.
On digital currencies and financial bonds, Chong highlighted the increasing need to provide an independent third party that would hold clients’ crypto assets. He said:
“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.”
While Chong supplied no detailed information about the operations of Fusang Vaults, he did add, though, that the firm is currently working with insurance companies to safeguard clients’ digital assets. Fusang Investment Office is regulated by the Monetary Authority of Singapore, (as most of their services are in Malaysia, Singapore, and Hong-Kong) and licensed by the Securities and Futures Commission of Hong Kong, according to its official website.
Coinbase, a fast-growing cryptocurrency exchange and one of the largest at this moment recently launched its crypto-custodian solution too, targeting institutional clients. Coinbase Custody is operated through an independent member of the U.S. Financial Industry Regulatory Authority (FINRA) in compliance with the U.S. Security and Exchange Commission (SEC).
Although it is too early to predict whether Fusang Vaults would pose as a competitor to Coinbase, it appears that not everyone is buying Fusang’s new diversification. Jolyon Ellwood-Russell, a partner at Simmons & Simmons, opined in an interview with South China Morning Post, that since crypto custody is not regulated in Hong Kong, Fusang Vault users are direly and solely dependent on the terms and conditions in the service contract in the event of any losses. And according to Jolyon, unfortunately, the existing documentation does not take care of all legal eventualities. He said:
“For example, in what capacity are the custodians holding the assets? Are they holding them as a bailment, that is, a trust, so the assets are outside the estate of the custodian on an insolvency. Just having segregated accounts does not automatically mean that on an insolvency the investors’ assets will be protected or recoverable from a receiver or liquidator.”
Regardless of opinions, however, it is fair to suggest a growing need for institutional investor services in Asia and service like Fusang Vault would only open up the industry to a plethora of new investors and institutional capital.