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Hong Kong Authority imposed a new requirement on cryptocurrency exchanges and companies to employ a custodian service. InVault Launches in Hong Kong as Government wants every crypto exchanges to have a custodian service provider. Popular Chinese cryptocurrency custodian service provider invault launched in Hong Kong following a government mandatory order to crypto firms.
Crypto Custodian Services InVault
Hong Kong’s new regulations for cryptocurrencies stresses more on the safeguarding of digital assets. The government made a mandatory ruled requiring all cryptocurrency companies and companies to employ a custodian. Moreover, the move aims to safeguard digital assets from theft or losses.
In Hong Kong, there is still a safe haven for cryptocurrency activities, but recently the government issued a strict condition for licensing. The new law targets crypto trading platforms and fund managers to ensure their clients’ digital tokens are well protected. The government believes that seeking the services of a licensed third party can improve the security of user funds.
Reports indicate that invault could be the first digital asset custodian to take advantage of the new licensing requirements to lunch its services in Hong Kong. InVault currently controls more than 1 million Ethereum in China Mainland. The company recently obtained a new trust license from the Hong Kong regulator. The company is expected to start offering its’ custodial services to an assortment of crypto firms in Hong Kong in December.
Are User Crypto Assets safer with a third party Custodian?
According to reports, Invault protects its client’s assets by safely keeping their private keys in a physical vault. Kenneth Xu, the founder, and CEO of InValut predicts that eventually licensed trustees or custodians of digital assets will become a normality. He was quoted by the South China Morning Post saying that custodians for crypto assets will be regulated and operated under a trust license.
Meanwhile, the current landscape of cryptocurrency mares by a vast amount of security concerns. This attributes to the averagely high numbers of cryptocurrency hacks in a recent history. There are reports of trading exchange’s own employees stealing client’s funds and related in-house orchestrated hacks.
According to the Hong Kong Government, such incidents can be tamed down by deploying the services of a cryptocurrency custodian. According to Mr. Xu, trustees play an increasingly significant role globally as regulated platforms linking cryptocurrency world to the traditional financial systems. Meanwhile in the US crypto custodial companies such as BitGo AND Coinbase provides cryptocurrency custodian services to regulated clients.
Having a strong custodian can play an important role in protecting clients digital assets stored on a cryptocurrency exchange or related platforms. However, the custodian still faces the same problem as the entity it offers its services to. However, the custodian’s clients can also go rogue and illegally transfer funds belonging to clients.
Do you think having third-party custodians on every cryptocurrency entities with that accepts deposits from the general public could alleviate the current security issues in crypto? Share your ideas on this topic and many more on our Twitter and Telegram pages.