Digital assets are digital representations of value, made possible by advances in cryptography and ledger technology. Custodians safeguard them by either storing the assets online, offline, or through a multiple approval approach. The Group is likely to focus on the Singapore market, with a view to expanding into the global market. In Singapore, the provision of custodial services for digital assets is a nascent market and any first mover into this space is expected to enjoy significant business and operational advantages.
Custodian Services |
A custodian is a licensed financial institution that holds customers’ securities for safekeeping and administration. The primary role and responsibility of a custodian in the FinTech business sector is the safekeeping of a customer’s digital assets. This is achieved through safe key management, which allows the assets to be cryptographically secured. However, unlike for traditional assets, an entity has custody of a digital asset simply by holding the private key on behalf of the asset holder, ensuring that it cannot be accessed by third parties. A private key is essentially a randomly generated binary number that is used to encrypt and decrypt information and is only made available to the originator of the encrypted content. Subsequently, this private key is all that is required to confirm a transaction. This is in contrast with public keys, which are essentially a long numeric code that is cryptographically derived from a specific private key. The public key is available to the general public and is available in an online directory. The public key must be paired with the correct, corresponding private key for a transaction to be executed.
Digital assets are digital representations of value, made possible by advances in cryptography and distributed ledger technology. They are denominated in their own units of account and can be transferred from peer-to-peer without an intermediary. While there is no universally accepted definition of digital assets, there are generally five distinct categories of digital assets:
(i) Security tokens: These are tokens of special characteristics that are similar to traditional instruments like shares, debentures, or units in a collective investment scheme.
(ii) Utility tokens: Utility tokens are digital tokens that seek to provide value to investors by giving them access to a future product or service. Investors may then use such tokens at some future time, to obtain access to the issuers’ products or services.
(iii) Cryptocurrencies: Crytocurrencies are the most common type of digital asset, using cryptography for security, and are designed to work as a medium of exchange.
(iv) Stablecoins: Stablecoins are digital assets that attempt to stabilize volatility by pegging themselves to a stable asset such as the US Dollar or gold.
(v) E-Money tokens: These are tokens that are designed to function as a form of electronic money that represents a claim on the issuer, are issued on receipt of funds for the purpose of making payment transactions and are accepted by a person other than the issuer.
Custodians safeguard digital assets by ensuring that customers’ private keys are maintained securely. Generally, this is achieved by either storing the assets online, a method called hot storage, or offline, known as cold storage, or through a multiple approval approach, known as multi-signature and smart contract wallets. In exchange for the provision of such custody services, custodians normally charge investors custody fees for the safeguard of the investors’ digital assets. Such fees may be charged on an annual basis or on a monthly basis.
The Group is likely to focus on the Singapore market, with a view to expanding into the global market. In Singapore, the provision of custodial services for digital assets is a nascent market and any first mover into this space is expected to enjoy significant business and operational advantages.
The Group’s may ventures overseas, depending on the evolving regulatory environment in relation to the FinTech industry globally.
The Group’s Custodian Business will leverage on its knowledge in the FinTech (financial and blockchain technology) sector to advise other companies on expansion, with a specific focus on providing advisory, consultancy and/or management services related to FinTech regulation, licencing, as well as the adoption of FinTech strategies and technology.
Consultancy Services |
The Group’s Custodian Business will leverage on its strong domain knowledge in the FinTech business sector to advise other companies on their expansion into the FinTech business sector. The Group will specifically focus on providing advisory, consultancy and/or management services related to FinTech regulation, licencing, as well as the adoption of FinTech strategies and technology.
Under the Consultancy Business, the Group will advise customers in the following areas:
(i) licensing, compliance and regulatory matters in the FinTech business sector;
(ii) development of an appropriate FinTech strategy for the customers’ business;
(iii) alignment of the FinTech strategy in line with customers’ corporate goals;
(iv) investment in, development and/or adoption of the right technology; and
(v) updating to ever-changing technology trends.