As the blockchain and crypto asset space continues to grow with the rise of cutting-edge applications, large companies and institutional investors are tapping into the space. As of now, there are more than ten thousand currencies in the global digital money market, and the total crypto market value has exceeded $2 trillion. MicroStrategy CEO Michael Saylor has predicted that Bitcoin will continue to appreciate and that the market value of Bitcoin will reach $100 trillion one day.

But the crypto landscape does present some challenges. Financial services are heavily regulated around the world, and each region has its compliance standards and guidelines. From Binance to Bittrex, many crypto companies bear the brunt and even had their licenses revoked when the compliance requirements were not met. For global crypto institutions looking to provide custody solutions for clients around the world, the obstacles are particularly apparent. 

Providing compliant, customizable custodian services 

To ensure they trade and invest crypto in a regulatory-compliant environment, many institutional investors look to custody service providers for a diversified array of compliant and customizable custodian services. Being backed and supported by Huobi Technology Holdings Limited (“Huobi Tech”) (stock code: 1611. HK), a company listed on the Main Board of the Stock Exchange of Hong Kong Limited, which is dedicated to becoming a one-stop crypto asset service platform, Huobi Trust Hong Kong aims to provide asset custody, wealth management, private customization, family trust services and more. 

“As a registered trust company under the common law system in Hong Kong, we aim to become the leading crypto asset trust service provider in the world,” said Lily Zhang, CFO of Huobi Tech.

Earning trust through transparency

Gaining the trust of crypto asset owners is another important element of crypto custody. Without the recognition of an independent third party, it’s hard for institutional investors to evaluate whether the options offered by the custody provider are in their clients’ best interest. 

To attain this transparency, custody providers normally rely on attestation reports and certifications. But what’s more important than the third-party documents is that custody providers demonstrate a continuing commitment to improving their risk management protocols. 

As a registered trust company in Hong Kong, Huobi Trust Hong Kong is fully licensed and compliant with the requirements under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615 of the laws of Hong Kong) and has obtained the Hong Kong Trust and Company Service Provider (TCSP) license (TCSP Licence No.: TC007494). As such, its daily operations must abide by the relevant Hong Kong regulations as well as the AML/CTF requirements, which precludes the company from money laundering, terrorism financing and other serious risks that custody providers would possibly face.

“We realize transparency is the key to building trust with our clients, so we do our due diligence in this area,” Zhang said. 

Making security a priority 

One of the biggest concerns for institutional investors is the risk of cyberattacks. Since the theft of 850,000 bitcoins by Mt. Gox in 2013, crypto service providers have been facing different levels of security pressure. In 2020 alone, hackers have stolen more than $120 million in the crypto space. In August 2021, hackers took advantage of Bilaxy's security vulnerabilities and stole more than $21 million worth of cryptocurrency.

With an in-depth knowledge of best security practices, Huobi Trust Hong Kong says it remains focused on the prevention of cyber threats and the protection of client assets via its in-house security infrastructure and time-tested risk control framework. Huobi Trust Hong Kong offers products and services that are designed and built for asset protection including globally-distributed multi-signature cold wallets, which effectively improves the security level of customers’ asset storage and much more.

“As the crypto asset space is evolving, we will continue to improve our product offerings in trust and custody services and ensure that the safety and security of our client’s assets always come first,” added Zhang.

As crypto regulations continue to evolve, it is imperative that institutional investors—and all investors for that matter—and their custody providers adhere to the compliance regulations and prioritize the security of their assets in a volatile environment. While the crypto space is ripe for many opportunities, there are also significant risks that must be mitigated to ensure the most secure user experiences possible. 

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