SALT conference panel demystifies crypto custody issues

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On Wednesday, during a Salt conference panel on the opportunities and obstacles facing institutional crypto adoption, attendees addressed common misconceptions about crypto conservation and investors’ fear of getting it done. hack or lose their investments.

Take-out? Crypto custodians must provide the same types of institutional infrastructure that is available for all other asset classes. As institutional interest in crypto grows, the panel concluded, crypto exchanges and custodial providers must address industry concerns about safe custody and fraud prevention.

The panel was part of the SALT conference – financier Anthony Scaramucci’s annual event covering finance, technology and geopolitics – which was held this week in New York City.

I’m amazed all the time when I hear people say they always think you can’t track these trades, said panelist Jalak Jobanputra, founding partner of venture capital firm Future Perfect Ventures.

Most investors don’t understand public key cryptography, she said, which has always protected digital blockchain assets. Public key is a method of encrypting data with a public and private key – or information used to scramble data, making it harder to hack. Since the data is encrypted by two separate keys – public and private – instead of a single shared, it is more secure.

It is therefore up to crypto custodians to promote that they can provide the same types of institutional infrastructure to hold crypto as for all other asset classes, said panelist Brett Tejpaul, head of institutional sales, commerce, of world-class custody and services at Coinbase GLobal. Inc.

We built the platform to meet the rigorous due diligence requirements of institutional investors in the same way they would undergo due diligence from Goldman Sachs or JPMorgan, or others, Tejpaul said. If we can put crypto in a position relative to other financial assets and assess its safety from operational risk and other elements of risk relative to financial assets, you will find that, in fact, crypto, in many case, is more secure.

Glenn Barber, head of sales and business development at digital custodian Copper, said the confusion for institutions lies in the message.

Those new to crypto don’t realize that custodians have built military-grade security and technology into their systems, Barber said. The base layer value proposition is just how do I make sure that if I’m going to buy digital assets, they’re stored in a place where I really don’t think they’re going to go.

Most institutions are still unwilling to hold primary crypto assets, they are gaining passive exposure like how JPMorgan Chase & Co. announced in March the launch of a structured note offering linked to a basket of stocks. favorable to Bitcoin.

The big regulatory question is how to open that up to real institutional participation in the underlying projects we are all working on, that’s the heavy lifting for the next year or two, said panelist Brian Brooks, former Interim Controller of the Currency and the former CEO of Binance.

One of the things that we don’t do a great job as a community to pass on to the world is: we’re new, so we seem risky, and we’ve never asked the question: risky compared to what? Brooks said.

Brooks said he thinks the idea of ​​crypto being riskier than things like Equifax’s data breach or any cyber breach is more like a state of mind.

When people talk about crypto, nobody talks about it because we believe those risks are the state of nature, Brooks said. We need to start talking more about the problems that we are gradually solving. There may be new risks, but on the net there is probably less risk and this is the story that we don’t do a great job of telling, so we let the incumbents win the narrative, even if the The least risky option is on the blockchain.

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