British security services company G4S (LON:GFS) is launching a custody solution for cryptocurrencies, in a bid to capitalise on the rising popularity of digital assets and the growing need for secure crypto storage.
In a press release published on October 16, the FTSE 250 firm indicated that the move was in responds to demand from cryptocurrency exchanges seeking “safer and more robust security solutions”. The company pointed to the number of high-profile exchange hacks in the past two years, noting that they had resulted in about $1.2 billion of stolen crypto, according to one estimate.
“Our clients approach us to discuss solutions to their requirements because of G4S Cash Solutions’ experience in protecting high-value items and G4S Risk Consulting’s experience in developing bespoke solutions to complex challenges,” Dominic MacIver, senior risk analyst at G4S Risk Consulting, said. “Working with our clients, we are continuously applying their expert knowledge of crypto-assets and our best practice in physical security to a sector at the cutting edge of financial technology.”
G4S argued that online crypto wallets were vulnerable to theft, as they “are only as secure as your computers are from hackers”.
In contrast, G4S’s offering is an offline storage solution, built on the foundation of a “vault storage”. “We not only take the assets offline, but break them up into fragments that are independently without value and store them securely in our high security vaults, out of reach of cyber criminals and armed robbers alike,” MacIver explained, adding that only when the fragments are combined with specific technology, they unlock access to the value stored within.
World-class custody solutions are a key part of the required infrastructure that would allow the crypto market to mature and attract institutional investors. On Monday, Fidelity Investments, the fourth-largest asset manager in the world, announced that it planned to launch its own custody solution, as well as other products aimed at institutions. Earlier this year, the largest US digital currency exchange, Coinbase, launch a custodial service of its own.