Cryptocurrency Custody Services May Be the Best way to Safe Keep Cryptocurrencies
Invault, a Shanghai-based blockchain startup believes that the removal of any human oversight when it comes to holding cryptocurrencies is the best way to ensure that the assets are secure and safe. According to The South China Morning Post’s article released on September 11, 2018, many cryptocurrency exchanges are aware that a cryptocurrency custody approach is the best way to safe keep large amounts of cryptocurrencies and digital assets.
Keen to use Cryptocurrency Custody Services
“Today, the vast majority of cryptocurrency exchanges globally still involve their senior management in managing the transfer of digital tokens ordered by clients,” said Kenneth Xu, the founder, and chief executive officer of InVault.
“Putting the private keys to your cryptocurrency assets in the hands of senior management is akin to putting all your money in their control.”
Xu noted that cryptocurrency custody services will be very popular by cryptocurrency exchanges in China as they want to avoid the risk of holding onto a large number of clients’ assets. While China has banned the use of cryptocurrencies and cryptocurrency exchanges, the cryptocurrency trading community remains relatively active.
The South China Morning Post stated that Xu plans to launch the services this week. The company has however already received an order from a cryptocurrency exchange to safe keep one million ether tokens.
The CEO believes that the cryptocurrency custody service will help the exchanges focus more on matching purchasers and sellers of cryptocurrencies and worry less about the handling, management, and storage of cryptocurrencies. In traditional stock trading, the securities are kept at a centralized depository and not held by the company. The same standard should apply in the cryptocurrency industry according to commentators.
Trading Cryptocurrencies despite the Crypto Ban
Despite China’s best efforts to ban the presence of cryptocurrencies in the country, cryptocurrency trading is however reasonably active in the nation. The South China Morning Post mentioned that, while the Government attempted to close down all local cryptocurrency exchanges since the ban in September 2017, many exchanges were able to skirt the ban by reinventing themselves under new domain names. These companies would move their servers from outside the country and register their company offshore.
According to sources familiar with the matter, many retail investors would switch their fiat currency into Tether and then undergo a direct exchange between cryptocurrency wallets. These actions would be masked behind a Virtual Private Network (VPN) to hide the identity of the user. “Chinese regulators definitely have the technical ability to shut down VPNs,” said a source close to a cryptocurrency exchange.
“However, traditionally it takes numerous conversations with different stakeholders to reach a consensus on configuring a firewall, which lengthens the process.”