Regulated Crypto Custody Services Will Attract $20 Billions of Investors’ Funds

In the nearest future, regulated crypto custody services are believed to be introduced across the crypto industry and bring significant changes.

As it has been informed by Bloomberg, regulated crypto custody services are said to enter the cryptocurrency industry and fully change the game. Experts explain the reason of a potential enormous impact of regulated crypto custody services on the market the following way: more and more high net worth individuals and institutional investors are engaged in cryptocurrencies and all of them need to find a secure way to keep their funds.

At the moment, security of funds may become a real headache for investors. A managing partner at Multicoin Capital Samani, who is one of those institutional investors taking part in testing of Coinbase Inc.’s new crypto-custody service, believes:

“There are a lot of investors where custodianship was the final barrier. Over the next year, the market will come to recognize that custodianship is a solved problem. This will unlock a big wave of capital.”

Some of Coinbase Inc.’s new services are almost ready, and now Coinbase is working on getting approval that will let it become a qualified custodian. In order to do it, it is necessary to meet strict US standards for storing assets. Though Coinbase is probably the most well-known company to offer institutional investors crypto custody services, there are also some other companies that develop similar services.

Circle and BitGo are also among the companies providing crypto custody services. And they are both going to offer regulated services. Some weeks ago, it was informed that BitGo had already filed an application to become a regulated custodian.

In May, another crypto custody services Komainu, that represents a joint venture of an investment bank Nomura Holdings Inc., and crypto companies Ledger and Global Advisors, started its operations.

There are a lot of talks about major Wall Street firms that have gone into the crypto industry and are considering an opportunity to work on crypto custody services or have already started their activities in this sphere. Bank of New York Mellon Corp, JPMorgan Chase & Co., and Northern Trust Corp. are among the companies that are said to be working on development of crypto custody services.

Regulated custody services would allow investors enter the crypto industry more actively as they will be more confident about the security of their funds. And, in the context of potential introduction of regulated crypto custody services, there is one very interesting question: How much money will be brought to the market?

In this regard, Sam Mcingvale from Coinbase said:

“About $20 billion in crypto assets are poised to flow into custody services once they’re available”.

Recently, the figure has been getting high, despite Bitcoin’s downward trend, as new projects hold initial coin offerings, introducing their own tokens to the market.

As for the cost of crypto custody services, it has become clear that they won’t be cheap. For instance, Coinbase takes a $100,000 initial fee and then 10 basis points per month. Moreover, its clients are required to have a minimum balance of $10 million.

Nevertheless, if there are more companies offering similar services, it may lead to decrease of prices. However, at the moment, there is no information when the regulators will approve these services.

How Can I Invest in an ICO and Not Lose?

Zeon, a community driven project working to solve the main problems of crypto industry, seems to have the answer to this burning question.

A good many have received a message like this, no matter from a friend, colleague or even a family member. How should one respond?  This is how we would do this.

A friend:

“I found you in one of the crypto-chats. I am looking for someone to talk about this topic. I want to start investing but I’m interested in the opinion from the side. I’ve been thinking about starting trading. But I get advice to invest in ICO. They say that investing in ICO is more profitable. Did you have any experience investing in ICO?”

We can all admit that once once upon a time we were newcomers to the crypto-economy, who, from time to time,  have received a message like this or fairly similar. Experienced ones may state without any twinge of conscience that the crypto market is complicated and keeps changing, so the only answer is experience. Let us share ours with you.

Startups offer their future customers the tokens to represent functionality in their product for an attractive price. While the success of any startup relies on the development of a successful blockchain utility, the value of the token can increase as well.  Looks good in theory. Everyone can become a small venture investor and multiply their capital. However, the reverse is also highly possible, as tokens can lose value. This begs the question: who is responsible for money invested? Unfortunately, the only answer is – nobody.

When we transfer our money to any wallet, all tokens become property of the wallet owner. No one can refund the investment – and this is the main problem one may face when investing in ICO.

Blockchain Solutions For Blockchain Problems Or How To Take Back Control Of Your Money

Some ICOs have an escrow service to ensure investor funding. Governments discuss ICO regulation, but the downside to this is how can they be represented inside blockchain ecosystem. This about putting wood wheels from horse carriage on brand new sports car – it just won’t work. To address this, we need to look for blockchain solution, that can handle blockchain specific problems that can be implemented within the ecosystem, not outside it.

Some crypto projects made attempts but it were situational moments. One global decision was proposed by ZEON – a community driven project with smart blockchain, which has come up with a concept called ATLAS. ATLAS makes ICOs more secure by involving investors during the initial project development process. It provides a level of accountability to developers giving token holders additional assurance that their investment is safe. With Atlas concept ZEON is able to guarantee their token holders a minimum viable product or get their money back.

How Does It Work?

The ZEON platform allocates each developer an individual wallet address at no cost to collect investments. All funds are locked on a wallet accessible to both the contributors and developers, with the latter only being able to withdraw at a rate agreed upon by both parties via smart contract.

zeon-1

All in all, there are two types of interaction with the ICO/crypto project:

  1. ZNC tokenholders issue secured purchases – this will be more popular at the early stages as  ICO/crypto project teams become familiar with the ZEON Network.
  2. ICO/crypto project issues secured purchases itself.

Once ZNC is purchased during a particular ICO, the user receives the tokens in the ZEON Multi Wallet (including ETH sub-tokens, altcoins, or other assets). This allows the project funds to be monitored and enables voting by both parties to either reduce or increase the daily financing of the team (DAO principle). Herewith, each user can be sure that their purchase is reliably protected by the ZEON.

zeon-2

Secured investments are made possible by the ZEON main blockchain, smart-contracts, smart blockchains (sharding), and Hyperion oracle.

The Hyperion system is continuously receiving data from exchanges and smart contract. Once a startup coin is issued on an exchange, the starting rate is stored via Hyperion protocol for subsequent analysis. The protocol analyzes the profile and determines an “average arithmetic value of the current value of the ICO token” using a proprietary formula.

This all being said, one should bear in mind that the presence of a flashy and beautiful project site, or even well known crypto advisers does not guarantee invested funds could be returned or have any effect on the growth of a coin or token. In a lot of cases just the divergence of vision between founders or main developers lead to failure or scandal – accidents happen. That’s why we believe that the crypto industry needs projects like ZEON and alike to bring the strengths of an open and efficient community to the surface, and relieve those entangled in contradictions from anxiety.