Two heavyweights are throwing their support behind a startup that hopes to solve one of the most vexing problems for institutional investments in crypto.
- Venture firm Two Sigma and blockchain company ConSensys have invested $8 million into digital-asset custody provider Trustology.
- The startup tackles one of the key challenges in cryptocurrencies: safely holding digital assets in a way that protects them from thieves but also allows the rightful owner to get quick and easy access.
- The funds will be used to develop new products, move into additional asset classes, and expand internationally.
A company looking to solve one of the biggest pain-points in crypto just raised $8 million from two heavyweights.
London-based Trustology on Thursday announced it had raised funds from Two Sigma Ventures, the early-stage investor tied to one of the world's largest hedge funds, and ConSensys, the blockchain company led by Ethereum founder, Joseph Lubin.
Trustology tackles one of the key challenges in cryptocurrencies, safely holding digital assets in a way that protects them from thieves but also allows the rightful owner to get quick and easy access to it, say for purposes of intraday trading. With digital currencies, investors hold a so-called key that gives them access to their account.
Many firms have developed processes around "cold storage," effectively an offline wallet. But that can make it difficult get access to holdings quickly, making it less attractive for those who want to trade in and out of markets quickly.
On Wall Street, custody banks such as State Street and BNY Mellon safeguard large amounts of wealth for other institutions while abiding by strict regulatory requirements. But in crypto, custody firms are just emerging.
A number of notable crypto investors have said that solving custody is one of the last remaining challenges holding back an influx of institutional money. Galaxy Digital Ventures and Goldman Sachs recently made a $15 million investment in crypto custodian BitGo Holdings. Fidelity Investments has even announced a crypto custody solution that it expects to roll out next year.
The company's first product combines private-key protection with fast execution capabilities by keeping the keys inside "tamper proof" hardware pods that are hosted in secure data centers, according to the statement. Encrypted backups are held in the cloud.
A tag line on the firm's website sums it up: "Safer than cold storage at hot wallet speeds." Trustology's founder, Alex Batlin, previously led blockchain innovation as UBS Group and Bank of New York Mellon.
"Trustology has developed breakthroughs in key management and is providing support services to clients seeking unparalleled safeguarding for digital assets," Lubin said in a statement. "By prioritizing security without the need to sacrifice accessibility, Trustology will serve current digital asset holders and attract new institutional and individual investors to the space."
Funds for Trustology will be used to develop new products, move into additional asset classes and expand internationally, the statement said.
The funding comes despite a crash in the market for cryptocurrencies. Bitcoin, the largest, has fallen 80% percent since its December 2017 peak. Ethereum has slumped more than 90%.