Crypto Custody Tech Firm Fireblocks Unveils New York-Regulated Trust Company

As a seasoned crypto investor with a keen interest in the latest developments within the industry, I’m excited about Fireblocks’ announcement of its upcoming cold-storage custody services for US clients and the launch of its Global Custodian Partner Program. The increasing demand for secure and regulated custodial solutions is a clear response to the recent challenges faced by some players in the market, such as FTX.

Fireblocks, a firm specializing in secure storage for cryptocurrencies, aims to create a trust company under New York’s financial regulatory body, the NYDFS. Subject to approval from regulators, this new entity, Fireblocks Trust Company, will provide cold-storage services for US clients. (Source: Pending final regulatory approval, Fireblocks, a specialist in cryptocurrency safekeeping, intends to set up a trust company under the supervision of New York’s Department of Financial Services. Once authorized, Fireblocks Trust Company will offer cold-storage solutions to American clients.)

A New York headquartered firm is developing a network of authorized custodians, referred to as the Global Custodian Partner Program. This initiative is set to debut this quarter with an inaugural roster of participating companies from the US, UAE, UK, Singapore, Thailand, and Australia.

As a researcher in the field of cryptocurrency custody, I have observed that the landscape is undergoing significant changes following the FTX incident. Institutions are increasingly turning to novel key-sharing solutions such as multiparty computation (MPC) for more flexible risk management strategies. With the unfortunate experience of thousands of FTX users whose assets were stranded when the exchange went down, there’s been a renewed emphasis on self-custody and the implementation of technologies like MPC that help mitigate counterparty risks.

Fireblocks, previously known solely as a software provider, has identified that certain clients may require a custodian for regulatory or risk management purposes. However, Fireblocks’ SVP of Partnerships, Adam Levine, emphasized their dedication to continuing advancements in self-custody solutions.

As a crypto investor, I strongly believe in the significance of holding your own digital assets and have no intentions of retracting that belief. However, it’s becoming increasingly evident that there is a shortage of experienced custodians in the US focused exclusively on safeguarding digital assets.

In the political realm, last February’s proposed SEC modifications to the custody rule could potentially have significant implications. These adjustments, part of a contentious and ongoing initiative called SAB 12, may restrict registered investment advisers (RIAs) from placing their clients’ crypto assets into a narrower range of institutions. Under this proposal, only entities such as registered broker-dealers and federally chartered banks would meet the qualifications, contradicting the existing state licensing framework.

“Levine stated that our company doesn’t intend to provoke or challenge any regulatory bodies, political parties, or governments. Instead, we are adhering to the current regulations and framework. We recognize the market demand from clients and business opportunities. We are fully aware of the present regulatory stance regarding SAB 121, as understood by federal and state regulators. We believe that obtaining a trust license to qualify as a custodian is the appropriate strategy in this context.”

As a crypto investor, I can tell you that Fireblocks is expanding its custodian partner program by collaborating with licensed custodians who will utilize Fireblocks’ advanced technology. Currently, we’re in discussions with at least two potential partners in each jurisdiction mentioned. The first trust company, which is set to launch within the next few months, will serve as the initial U.S. qualified custodian for this program. However, we anticipate that more trusted partners will join the program in the future.