Technology
ZEDRA Enters The Cryptocurrency Space

A number of firms in the wealth management sector are entering the crypto space.
ZEDRA, the global
specialist in trust, corporate and fund services, is entering the
digital assets market, launching a solution for trading Bitcoin.
ZEDRA has secured the services of a globally recognised US
investment bank to hold the buyer’s fiat cash within its AAA
rated money market funds.
The identity of the investment bank wasn’t disclosed.
ZEDRA has also partnered with digital custodians Vo1t, trading
and settlement specialists BCB, and blockchain specialists
Constellation Group to provide all the components needed by
clients wishing to trade digital assets.
The business forecasts interest both from within its own client
base worldwide, as well as from those within its existing
introducer networks, meaning regulatory vetting will already have
taken place. It cites data from CNBC showing that Japan
leads the way in Bitcoin trades, accounting for around half of
global activity, but China is potentially an important market
also. The vast majority of trades take place as a result of US
dollar and Japanese Yen sales.
“The buyer’s fiat cash and the seller’s bitcoin will be held to
the order of ZEDRA and governed by an innovative tri-partite
escrow agreement containing the terms of the transaction.
Following proof of funds and verification of the bitcoin and
satisfaction of the terms of the arrangement, the transaction
concludes. The bitcoin is then transferred to the buyer and this
can either be via internet connected hot wallets, or it can be
transferred utilising Vo1t’s HSM cold storage custody platform,”
business development director John Hunter from ZEDRA, said.
ZEDRA recently announced that Corsair Capital LLC has taken a
majority investment in the company, subject to regulatory
approval. The group recently completed the acquisition of
Interben Trustees to enhance its international pension and
employee benefits portfolio.
Elsewhere in the European private banking space, other firms are
pushing into cryptocurrency areas. Julius Baer, for example, is
collaborating with SEBA Crypto, a Swiss firm that straddles
traditional financial services and the expanding cryptocurrency
space, which continues to generate interest in spite of high
volatility in such digital markets. The Zurich-listed private
bank already embarked on an early-stage minority equity
investment in the Zug-based firm last year. Bitcoin and other
cryptocurrencies remain controversial, however, with some
governments frowning on them as potentially enabling money
laundering and other abuses.
The wealth management industry can be sceptical or even hostile
to cryptocurrencies – a recent conference in Interlaken,
Switzerland, which was attended by WealthBriefing, heard
concerns about the source of wealth behind crypto trades.
Advocates argue that blockchain, which enables transactions to go
ahead without the need to be validated by a third party, can
rapidly speed up data flow and slash costs. Back- and
middle-office functions could be revolutionised, for example.
Jurisdictions such as Switzerland and Liechtenstein are striving
to gain a lead as hubs for such organisations. The US, the UK,
Singapore, Estonia, Canada and Australia are also prominent
jurisdictions.
Fellow Swiss banking group Vontobel offers financial
intermediaries such as banks, asset and wealth managers a custody
solution for crypto-assets with the launch of its "Digital Asset
Vault" – a move which it said broke new ground. (The Vontobel
facility means that customers no longer need to buy and store
their cryptocurrencies on individual crypto-platforms, which can
crash during volatile trading, or use a private security key to
access currency, which if lost or stolen leaves users without a
way back to the assets they have stored.) Falcon Private Bank
recently said that it accepts direct transfers of selected
cryptocurrencies.