A Japanese bank has formed partnerships with specialists in cryptocurrency security and Bitcoin investment managers to become the first crypto custody bank.
Partnership Creates First Crypto Custody Bank
Institutional investors have been restricted from making large-scale investments in digital assets due to the lack of security and infrastructure. Now Japanese Bank Nomura has formed partnerships to become the first bank with the ability to provide custody services for digital assets. The new venture dubbed Komainu is a joint effort between Nomura with Ledger, cryptocurrency wallet, and security service provider, and Global Advisors, an investment manager focused on Bitcoin.
Komainu has been established to service the rising institutional investment interest in cryptocurrency demonstrated by moves like JP Morgan Chase opening the first Wall Street digital asset trading desk and a Reuters survey that concluded one out of five financial institutes have plans to move into the space in 2018 by providing the investment management industry with infrastructure and an operational framework. It will also provide standards of best practices for digital assets investing.
Komainu to Provide Infrastructure and Security for Institutions
Jez Mohideen, global chief digital officer, at Nomura was quoted by The Trade speaking about the new partnership, he said: “Global investment managers have long been held back from full participation in digital asset markets, limited by operational and regulatory risk.” He continued speaking about the future services;
“Our new partnership will set the required standards that will bring peace of mind to digital asset investors and provide tools and products to enable better integration with more traditional investment vehicles such as mutual funds.”
To date, only exchanges have offered cryptocurrency storage services in hot or cold storage wallets. However, as proven by major breaches in security like the January Coincheck hack in which nearly $500 million worth of digital tokens were siphoned from the exchanges storage concerns about the lack of robust security have kept institutional investors from putting large amounts of money into cryptocurrencies.
Nomura trusts that Komainu will satisfy institutional security concerns by offering guaranteed asset administration and fund management services. Jean-Marie Mognetti, co-principal of Global Advisors Holdings commented on the joint venture saying;
“Since its first digital asset trade in 2012, Global Advisors, the parent company of CoinShares, has been looking for a robust custody solution, the likes of which are readily available in the analogue financial system, This [partnership] will open new and exciting opportunities to global participants and contribute to move digital asset closer to mainstream offerings.”