Hong Kong-based Legacy Trust has grown to be one of the most active and innovative players in the field of custodying digital assets. It is already working with nearly 20,000 entities including OTC desks, cryptocurrency funds, high net worth individuals, amongst others. It recently launched Ledger Vault (in partnership with Ledger) to provide cutting-edge digital asset custody solutions for institutional investors. Blockchain Asset Review spoke to chief executive Vincent Chok in what makes his firm different from the other competitors in the field.
By Tsering Namgyal
BAR: Given the rise cybersecurity hacking incidents, the number of custody solutions have come up including Anchorage, Vontobel, Fidelity, Coinbase, State Street and German stock exchange etc? What is that you offer that is different from others?
VC: The fact that such big names are entering custody space is a good sign that the industry is maturing, and heading in the right direction. We act as a bridge between the traditional world of pensions, custody and digital assets. As a publicly registered and licensed trust company in Hong Kong, we can offer clients the regulatory benefits of our region, as well as international expertise in digital asset custody.
As a boutique firm, we can be nimble in responding to the fast pace of the digital asset space, and offer a tailored service. This is something we are continually building on with our partnership with Ledger to launch the institutional-grade secure Ledger Vault. In the long-term we will continue to produce solutions for digital asset holders who are concerned about the safety of their holdings.
BAR: Do you think you are confident in providing a secure custody solution for something as new as digital assets?
VC: Our traditional finance background is one of our greatest strengths. We have always been very forward-thinking, and kept pace with the changing landscape. We have a team that really understand digital assets and custody, and the digital asset division is the fastest growing part of our business.
BAR: I understand you have set up a joint venture with Ledger Vault? How are you together planning to properly secure digital assets?
VC: We collaborated with the team at Ledger to create Ledger Vault, an institutional-grade digital asset solution, to better serve clients that need the highest-grade of security. It draws on all of our knowledge of best security and requires multi-party authorization. This safeguards against a hostile takeover but uses technology to provide this service digitally – without needing all key-holders in one place at the same time.
Ledger Vault’s hardware wallet experience in conjunction with our own custody expertise has proven to be a valuable partnership between new technology and more established institutions, which provides clients with a higher standard of asset protection.
BAR: Who are your target clients?
VC: We focus mainly on exchanges, OTC desks, cryptocurrency funds, High Net Worth Individuals and other industry players that are currently self-custodying. We are working with over 20,000 entities in some capacity and are projected to grow significantly with the launch of a number of our upcoming products.
BAR: Do you think to move to a decentralized exchange model is a potential solution because then you will not be commingling clients assets at the exchange?
VC: I see the appeal in decentralized exchanges, and they’ll definitely have a place in the industry, but I don’t think they are the ultimate solution. So far, decentralized exchanges haven’t gained major traction due to a number of roadblocks: from the transaction speeds that aren’t fast enough for high-frequency trading, to their limited ability in handling fiat, and reliance on stablecoins. All of this leaves clients relying on centralized marketplaces to enter the digital asset world.
Whilst a decentralised exchange offers a number of privacy and security features, they shift the safekeeping liability to the users;relying on customers to have the technical know-how to hold assets and benefit from its decentralized nature. Similarly, a cold hardware wallet is secure – but that doesn’t prevent someone from losing or throwing away that hard drive containing all of their cryptocurrency.
I think the happy middle ground is somewhere between a decentralized exchange and allowing customers to choose their own independent custodian, whose primary service is to securely hold assets. There are a few projects working on this.
BAR: You are looking at creating a secure digital custody service? How different it is from securing in digital wallets, hot or cold?
VC: A custody service is an expert in secure storage, which frees the holder from having to learn all of the best practices for keeping their assets safe. Generally speaking, a cold wallet is only as secure as the wallet-holder allows it to be. For example, no amount of cold storage security could have protected users from “Blockchain Bandits” who guessed weak and predictable private keys, and proceeded to empty those wallets.
BAR: Have you received any cybersecurity threats/attacks so far?
VC: Cybersecurity is something we take very seriously. Legacy has become a well-known player in the space so we have been targeted. As a financial institution, this is something that comes with the territory. The overall sophistication of the techniques used by cybercriminals is increasing. We have noticed that as the safekeeping technology and best practices evolve, attackers have started to use more social-engineering, man-in-the-middle and phishing types of attacks. This is something that we can address with better education and increasing awareness. But the industry must remain extra vigilant against these types of attacks.