Hedge: Custodial Solutions for Cryptocurrency
Offering custodial services for institutional investors may involve the greatest lockup yet of long term hodlers: investment trusts that hold cryptocurrency for generations. Let’s take a look at how this might work in blockchain investments.
Early bitcoin advocates staunchly advocated the personal ownership of private keys, which allow one to “be their own bank”. This was especially popular after the 2008 collapse, when banks lost a lot of the public trust and the entire financial system was in danger of breakdown. Owning bitcoin was like buying gold and keeping it under your mattress; nobody could spend your bitcoin for you; nobody could lose the private keys to your bitcoin but you. Bitcoin was the ultimate in personal liberty and personal responsibility.
The infamous Mt Gox hack of 2013 only reinforced this to early bitcoiners, who have waited 5 years to be repaid for the hack (possible due to bitcoin’s price increase). More than even the 2008 collapse, Mt Gox cemented the “private keys or you have nothing” concept to the hardcore hodlers.
The flipside of this is people who have negligently lost their private keys, such as this Brit who threw away a hard drive with 7500 bitcoins on it.
Private keys may not be all they’re cracked up to be. While there is certainly a lot of value in holding one’s keys personally, and strong arguments in favor of it, it is not for everyone.
If the blockchain revolution is going to go fully mainstream, other solutions must emerge.
As cryptocurrencies have moved beyond libertarians and futurists, and blockchain applications have begun to come online that promote and improve access to capital markets, holding private keys has become a liability, often involving the purchase of hardware wallets (such as a Trezor or Nano S) for consumers, or off the shelf PCs that have never touched the internet for VCs and hedge fund managers.
These strategies have so far been ad hoc and experimental, and therefore, limited to higher risk investors. Pension fund managers don’t get fired for buying Apple stock, but they do get fired for losing millions in experimental technology that doesn’t meet the legal requirements for custody.
Hedge is changing that. Hedge provides best in class custodial services that allow fund managers access to cryptocurrencies and blockchain technology, while remaining fully compliant with the SEC and their investor’s expectations.
At Hedge, we realize that fund managers are more interested in focusing on market trends and growth than becoming their own bank. At the same time, the security of clients’ funds is incredibly important. With global assets under management (AUM) at $131 trillion, there is a lot of capital yet to be deployed in this new asset class…and keeping coins in custody is one of the final checkpoints to unlock it.
Looking for a white glove service that will handle the technical detail of your trades? We’re here. Check out https://usehedge.com for more info.
What Hedge Offers
Security:
Hedge leads the industry in providing secure wallets with proprietary best in class distributed cold storage practices. The keys to your funds never touch the internet and cannot be stolen by hackers. There is no single point of failure that can jeopardize your fiduciary.
Applications:
Hedge offers application interface solutions to make your apps work with our apps. Small regional bank looking to compete? Incorporate Hedge’s APIs into your app and give your customers the ability to buy and sell bitcoin through your institution.
Hedge’s apps will also help usher in the ultimate HODLing tool: self directed IRAs. And companies that manage IRAs can use Hedge’s APIs to allow their customers to go (very) long on Bitcoin and Ethereum, with all the tax benefits that accompany them.
Access:
Hedge is the only firm in the industry that gives you 24/7 access to your funds. We net settle transactions in a proprietary process that maintains the safety of keys in cold storage, but with near real time trading.
Let Hedge manage blockchains; you manage your clients.
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