Hex Trust see sample opportunities for growth at home and abroad
Growing institutional interest in crypto-currencies, not least as a hedge against rising inflation, has spawned a range of custodial services to safeguard the private keys without which nobody can access the digital wallet that contains the assets. Hex Trust, the Hong Kong based provider of institutional grade digital asset custody services, was among the first in the field.
Since it opened for business in March 2018, Hex Trust has gathered a diverse clientele in the private banking, wealth management and asset management industries. Future of Finance co-founder Dominic Hobson spoke to Alessio Quaglini, CEO of Hex Trust, about how he sees the crypto-custody market developing as non-fungible tokens (NFTs) and security tokens are added to the list of eligible institutional investments.
Questions that are being asked
1. What convinced you (it was relatively early when you set HEX Trust up) that there would be an institutional appetite for crypto-currency investing?
2. Union Bank of the Philippines is a client. What (so far) do we mean by “institutional” (e. g. banks, private banks, wealth managers, non-bank liquidity providers, hedge funds, traditional asset managers etc.) and what will we mean in future?
3. Crunchbase records that HEX Trust has raised $6 million from 11 investors, including a Hong Kong government fund. Where are you investing?
4. Custody is the core product. What techniques (HSM, multi-sig, MPC) are you using to safekeep private keys to crypto-currency?
5. You are seeing interest in Non Fungible Tokens (NFTs). How important is it now and how important do you expect it to become?
6. Security tokens, being replaceable, are less risky to safekeep. What have you had to do differently to accommodate security tokens?
7. How large is your security token business and how do you expect it to evolve?
8. You are involved in active discussions regarding tokenized bond issues. What factors will drive the growth of the tokenized bond markets?
9. When do you expect tokenized equity markets to take off?
10. You have a token issuance partnership with DLA Piper. What is the division of labour between you?
11. You provide settlement as well as safekeeping services. Was this a consequence of supporting clients that need to pre-fund their accounts or is it a core business in the long run?
12. You are working with Chainanlysis on customer due diligence (KYC, AML, CFT and sanctions screening). How do you divide the labour with them?
13. Are you a believer in digital identities as the long-term solution to the customer due diligence problem?
14. How problematic is the “travel rule” for your business?
15. You also have a partnership with IBM on cyber-security. How does the relationship work?
16. Your clients are getting into DeFi, lending and staking their crypto-currency. How adventurous are they being and how can you help them?
17. Do you see DeFi as a bubble, a useful set of experiments, or as mapping an entirely new future for finance?
18. You have a partnership with SIA to provide custody solutions to European financial institutions. Is that developing as fast as you would have hoped?
19. Do you have other plans to expand internationally?
20. Digital asset custody is becoming a more crowded and even mainstream business now. What do you see as your competitive differentiators?
21. What is your vision of the future of HEX Trust – to remain independent or be sold to a bank or to build a global business organically or by acquisition?