The founders of digital currency trading and custody platform Hayvn plan to offer regulated custody to investors concerned about the location and security of digital assets.
Hayvn is working with the regulator in the Abu Dhabi Global Market to become a "qualified custodian", which would provide an answer to the growing demand from institutional players as well as hedge funds, HNWIS and family offices to invest in digital currencies.
"It is a $120bn industry and it doesn't even have a 0.0000 what percent of allocation by global funds. If we can change that to 1%, we have a trillion-dollar business on our hands," Hayvn co-founder and CEO Ahmed Ismail told International Investment.
It is a $120bn industry and it doesn't even have a 0.0000 what percent of allocation by global funds. If we can change that to 1%, we have a trillion-dollar business on our hands"
Holding back demand currently is the lack of regulatory oversight.
"The banks are not so keen on it, because it is the wild west. If you're a private banker or IFA you are entrusted with someone else's money. Just imagine putting that money on an exchange and going back to your client: we tried something but now we don't know where the money is. That's a career ending move," Ismail said.
"This is why regulation is so important. It is the the gatekeeper for cryptocurrencies coming into the mainstream," he added.
The lack of options when it comes to parking digital assets is also stopping that growing demand turning into actual business. Under the Dodd-Frank act, institutional investors with more than $150,000 of assets must have a "qualified custodian" secure the holdings.
"We don't have that in crypto. If you're a fund willing to buy $2m in crypto where are you going to keep it? A usb stick?," Ismail asks.
Hayvn has partnered with French defence firm subsidiary nCipher, the leader in providing security services to the banking industry, in the process of becoming a regulated company by ADGM.
"For our wallets the keys are distributed and encrypted. If there's a nuclear bomb or earthquake, nothing is going to happen to those keys," he said.
The company has a multi-layered security approach in place with no Single Point of Failure (SPOF), meaning no one person can jeopardise the wallets.
Security in the crypto industry has come under intense scrutiny after the founder of Canadian exchange Quadriga died, holding the only key to unlock $145m in customer coins. "Hopefully that it will stop people putting money in unregulated exchanges. There's a reason we're called Hayvn : a place of safety and security," the CEO said.
The company expects to obtain the license from the regulator in the coming months. "Once we have it, we are able to have a solution that's available to the largest Swiss private banks that you know, to fund managers, HNWIs, family offices. The blue-chip institutional players are able to interact with us, since we are a regulated entity, we give the trust and the safety and security of crypto assets," Ismail added.
The company's co-founder, Christopher Flinos revealed that more than a quarter of private bank clients were interested in getting into digital assets. "We have been hearing from our private banking colleagues that from internal research that 27% of the customer base is looking for access to digital currency," Flinos stated.
As Hayvn is soon to be launched, for Ahmed Ismail "we're right at the beginning of this journey".