Building Global Standards for Digital Asset Custody with Onchain Custodian

Asia Blockchain Review
August 2, 2019

Asia Blockchain Review recently spoke to Onchain Custodian CEO Alexandre Kech after he participated as an expert panelist at the Unblock Bangkok meetup held late last month. His firm, Onchain Custodian (ONC), is a provider of custody service for the safekeeping of institutional digital asset investments. Kech talked about the flexibility of ONC’s solutions, the futures and best practices of crypto custody, and how ONC is building a global standard for digital asset custody.

Asia Blockchain Review: How is Onchain Custodian building a global standard for digital asset custody? What are the best practices in this field?

Alexandre Kech: Global standards cannot be created in isolation. Onchain Custodian (ONC) actively participates in industry initiatives looking at building standards and best practices for the digital asset industry.

ONC is an active member of Global Digital Finance (GDF) and co-chairs its Custody Working Group aimed at defining a code of conduct for digital asset custodians. As part of a GDF Custodian WG sub-committee comprising more than 20 institutions, with the support of SWIFT (the registration authority for the ISO 20022 financial data standard), we are also leading an API (Application Programming Interface) standardization initiative around withdrawal requests. The aim is to build a standardized set of open APIs for all providers in the industry to implement for the benefit of their customers. Today, every service provider has its own proprietary set of APIs which does not contribute to interoperability between platforms.

As a representative of the Singapore market, ONC also participates in the ISO TC68/SC8/WG3, an International Organization for Standardization working group looking at Digital Token Identification. As some tokens bear the same short code while representing different assets and as different codes are used to identify the same cryptocurrency (e.g. BTC also referred to as XBT), the group is looking at building a standard to issue unique identifiers for digital tokens to support automation and interoperability. I am also involved in discussions around securities token classification and identification. 

Finally, in Singapore, ONC is a member of ACCESS (Association of Cryptocurrency Enterprises and Startups, Singapore) and DAX (Digital Asset Exchange Association).

We believe it is critical for the industry to collaborate in non-competitive areas for the sustainable growth of the digital asset space.

 

ABR: Can you tell us more about the SAFE Digital Asset Custody Platform?

AK: Our SAFE platform v1 was launched in April 2019. It is a multi-sig cold storage offering with a very user-friendly interface, enabling our customers to co-manage their assets (i.e. the customer is part of the multi-sig transaction process) or to delegate full custody of their assets to ONC (i.e. ONC is in charge of the multi-sig process). Both are always based on multi-approved instructions from clients, properly and securely authenticated on our platform.

We are currently collecting feedback from our early adopters to evolve our platform iteratively in line with customer expectations. We are also working on v2, which will offer — to complement cold storage — a more efficient and automated secure management of transactions based on strict criteria and threshold setups by our customers.

Finally, we are also building an ecosystem of partners to allow clients to benefit from privileged access to OTC (over-the-counter) brokers through our escrow service — or not, staking platforms, lending and borrowing providers, wealth management services, etc. Our objective is to focus on what we do best: custody and partner for other value-added services for our customers.

 

ABR: Why did you choose to establish ONC in Singapore?

AK: Singapore meets three critical criteria for establishing a third-party custody service: 

  • Forward-Looking. Innovation is welcome and the rules are clear on what license is needed or not. MAS (Monetary Authority of Singapore) is a risk-based regulator that will not regulate innovation before it is effectively required. This is important for an emergent industry like ours. 
  • Safe. The country has one of the lowest crime rates in the world and benefits from an efficient and fair legal system, which enables us to offer even more security and certainty over our customers’ assets.
  • Central. Singapore, through its amazing airport, offers efficient access to all countries in the Asia-Pacific region, our current geographical focus.

ABR: What is the potential for the crypto market in Singapore and other countries in Southeast Asia?

AK: The potential of crypto and tokenization is huge, both in Singapore and around Southeast Asia. The number of tokenization projects raising capital through ICO, IEO, and STO in Singapore has been historically high and will continue to grow as regulation, best practices, and standards are established progressively, thereby enabling a sustainable industry. 

Our neighbors in Thailand, Indonesia, the Philippines, Vietnam, and Malaysia are approaching crypto and tokenization in different ways but none of the regulators have any obvious plans to undermine the industry. In Thailand, new crypto-related regulations are starting to bear fruit, with exchanges applying for licenses and eager to launch, including the Stock Exchange of Thailand. Malaysia and Indonesia have a similar approach with strong licensing laws, while the Philippines is probably a more liberal market worth exploring more. 

In any case, I am convinced that the tokenization of the economy and capital market is the future. This is why I have left my past career to join the movement, acknowledging that there is still a long way to go.

 

ABR: What is ONC doing differently from other players in the crypto market?

AK: We focus on delivering a quality, personalized service to our customers with a focus on the Asia Pacific. I always insist that our institutional and qualified investor clients’ queries or feedback be addressed directly and as soon as possible. As previously mentioned, we are also building our platform with our customers based on their feedback, suggestions, and innovative ideas. It is very enriching, mutually beneficial, and intellectually stimulating to work this way, both for us and for our customers, we believe.

 

ABR: Can you tell us about the partnership with BabelFinance? What are your next steps?

AK: We have teamed up with BabelFinance to deliver a secure custody solution to store its digital assets, while allowing our own customers to access BabelFinance’s crypto products. This is in line with our partnership strategy. They specialize in providing lending and borrowing products, which can benefit our customers, while we specialize in providing secure and transparent third-party custody, which can also benefit BabelFinance’s customers. This partnership makes us individually stronger.

The next steps will be announcing more partnerships in the coming weeks and months. We are selecting carefully who we want to work with to ensure professionalism and security, creating a win-win situation for both partners and our mutual clients.

 

ABR: How do you think the crypto market will perform this year? How can investors capitalize on the current market situation?

AK: We are not in the business of doing market analysis or advising customers. Other experts are better positioned to do so than we are. 

What we know, however, is that whatever the trend, bull or bear market, ONC will be there to support our customers in safekeeping their assets and, through our partnerships, will have access to potential returns from their positions in custody with us. Whatever the market conditions, we will be there standing shoulder to shoulder with our clients and providing them with a best-in-class custody solution.

 

ABR: In your opinion, what are the futures of crypto custody?

AK: The future of custody will be one of development, innovation, standardization, and collaboration. The industry is still in its infancy but is growing very quickly, with innovative models and technology being proposed every month. As previously mentioned, in order for this growth to be sustainable, standardization will be required in the way customers can access their custodians as well as in the way custodians operate and behave. Collaboration will be required, not only between new players but also with traditional custodians which, sooner or later, will truly enter this space to service their own customer base. 

 

ABR: How is fintech and blockchain changing the world?

AK: We’re still at a very early stage in the development of this industry, and already, you can see that it is making waves. Over the coming months and years, this impact will only grow. Blockchain and tokenization will enable Web 3.0 to an extent nobody can predict today. It will dramatically expand the investment and payment offering while simultaneously broadening the investor and user base from hundreds of millions to billions. Blockchain and cryptocurrency are born from philosophical ideals we all aspire to. The industry has and will continue to disrupt the status quo.


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Asia Blockchain Review

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Asia Blockchain Review is the largest initiative for media and community building in Asia for blockchain technology. We aim to connect all blockchain enthusiasts on a regional scale and facilitate the technological foundation of blockchain through a range of group discussions, technical workshops, conferences, and consulting programs.

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