Safe, a crypto self-custody company previously known as Gnosis Safe, has launched a subsidiary, Safe Labs, to build enterprise-grade self-custody solutions.

According to a June 5 announcement shared with Cointelegraph, Safe Labs is a commercial subsidiary wholly owned by Safe. It will focus on building institutional products using Safe Smart Accounts, a modular smart contract-based wallet system.

“The future of Web3 depends on giving users absolute confidence in their digital sovereignty,” said Lukas Schor, co-founder of Safe and president of the Safe Ecosystem Foundation. “With Safe Labs, we’re building the infrastructure to make that possible — enterprise-grade, secure and intuitive by design.”

Safe Labs will be led by Rahul Rumalla, formerly the company’s chief product officer. Rumalla has more than 15 years of experience in engineering and product leadership, having founded Web3 startups Paperchain and Otterspace, and previously served as director of engineering at SoundCloud.

Rumalla told Cointelegraph that the firm’s target is “any business that needs to hold or expose customers to onchain value.” He also said that “plenty of enterprises and institutions are already using us and have been doing so for years now.”

He added that the new unit would allow the company to “build a more opinionated product” for clients.

According to Rumalla, Safe currently secures $60 billion in assets, powers 4% of all Ethereum transactions, and anchors about 10% of the Ethereum Virtual Machine smart-account market.

Related: ‘If not self-custody, then why crypto?’ — Ledger CEO

The importance of self-custody

Self-custody refers to users maintaining control of their private keys, a critical component for safeguarding crypto assets without relying on third-party custodians.

To enhance their safety, institutional investors often also rely on multisignature setups. They require multiple private keys to authorize a transaction, rather than just one.

Still, many multisignature setups require so-called blind signing with hardware wallets. Blind signing refers to approving a transaction on a hardware wallet without being able to fully verify its details on the device’s screen.

This is because such transactions often leverage complex smart contract logic or custom data formats that the hardware wallet doesn’t natively support. This means that the user needs to trust the transaction information displayed by their internet-connected and vulnerable device — usually a computer — when approving a transaction.

This has led to disastrous consequences in the past. One recent example is February’s massive $1.4 billion Bybit hack, which was attributed to blind signing in the Safe suite.

The custody provider also released a post-mortem update explaining the root cause of the recent Bybit hack — a compromised developer machine.

Binance co-founder Changpeng “CZ” Zhao criticized the update. He claimed that the company brushed aside some issues involved and did not answer important questions raised by the hack.

Related: How to store crypto assets in a self-custodial wallet

Blind signing is still involved

Safe’s upcoming product is based on its “Safe Smart Accounts,” a modular smart-contract wallet built on the firm’s infrastructure. It allows for multisignature management, but still needs blind signing for many onchain interactions.

To address this issue, it would likely require multisignature solution developers, such as Safe, to collaborate with hardware wallet producers like Ledger and Trezor. Ledger CEO Pascal Gauthier previously acknowledged the issue.

“Blind signing is something that everybody does in the industry, but it’s crazy because it’s like signing blank checks online,” he said.

Magazine: Lazarus Group’s favorite exploit revealed — Crypto hacks analysis