Multinational security services company G4S is stepping into the world of crypto by offering offline storage to protect digital assets from criminals and hackers.
The London-based firm, which offers a range of services including prison transportation, monitoring equipment and response units, announced it has developed a vault for investors in the nascent industry. Over the last few years, the growth of Bitcoin, Ethereum and Litecoin, to name a few, have grown at an exponential rate. Yet, while they are presenting a wealth of opportunities, so too are they for criminals.
G4S said that it has started working with an unnamed cryptocurrency exchange.
Our security solution is built on a foundation of ‘vault storage’, said Dominic MacIver, a senior risk analyst at G4S Risk Consulting, in a statement. 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.
One of the challenges in the industry is locating secure storage options. According to recent figures from Carbon Black, a cybersecurity firm, $1.1B worth of cryptocurrency was stolen in the first half of 2018, this includes more than $500M stolen from Coincheck, a Japanese crypto exchange, in January. Many of the crypto assets stolen were kept in hot wallets. It is these, which are connected to the internet and more vulnerable to hacks.
While there are different ways that investors store their cryptocurrency, the most popular way is through online wallets. For G4S, though, they believe they have the answer with their offline storage, which provides a secure way of storing digital currency. With guardians increasingly turning their attention to cold storage solutions, this may help to lower the barrier to institutional investor adoption.
The [crypto] sector has attracted the same old threats for financial systems, including robbers, scammers, market manipulators and many others, said MacIver. Our innovative security solution helps protect against some of those threats by taking the assets offline and storing them in high-security vaults.
News of this comes at a time when financial players are considering similar solutions. Goldman Sachs, JPMorgan and Northern Trust are just a few names exploring custody services for crypto funds. San Francisco-based crypto exchange Coinbase has already launched its crypto custody service for institutional investors, which is currently available for institutions in Europe and the U.S. It is hoping to bring this offering to Asia before the end of the year.
This week, Fidelity Investments announced that it was launching an institutional platform for bitcoin and ethereum. The announcement from an institutional asset manager signals growing demand for these assets and may be the catalyst that drives the adoption of institutional investors.