The UK-based security company, G4S, is entering the cryptocurrency sector. However, instead of launching an exchange or a mining facility, it is offering a digital currency storage service. The FTSE 250 company announced on Wednesday, Oct. 17, that it had developed a new custody service for digital assets. It is designed to help protect crypto coins from criminals.
What Is G4s Offering?
The British company runs detention centers and prisons. It also stores cash for large companies. Its experience could help it in devising unique solutions for crypto custody. The company suggests that it has already started providing its custodial services to a Europe-based crypto exchange.
In a statement, the company’s senior risk analyst, Dominic MacIver, said:
“The [crypto] sector has attracted the same old threats for financial systems including robbers, scammers, market manipulators, and many others. Our innovative security solution helps protect against some of those threats by taking the assets offline and storing them in high-security vaults.”
The Crypto Market Needs Safe Custody Solutions
Cryptocurrencies have not experienced widespread global adoption as institutional investors have historically remained away from the digital market. One of the primary reasons behind their disinterest is the lack of custodial services. Cryptocurrencies have been long targeted by hackers who are not only intruding into cryptocurrency exchanges to steal coins but also cryptojacking activities to use the spare computing power of individuals and corporations to mine digital currencies remotely.
US cyber security company Carbon Black estimated that cryptocurrencies worth $1.1 billion were stolen in the first year of 2018. This includes the massive $500-million hack of Japanese crypto exchange Coincheck in January. As cryptocurrencies are held anonymously, it is difficult to trace who stole the coins.
Because of multiple problems with crypto hacking, the crypto custody sector is experiencing growth. Recently, Fidelity Investments announced its plans to offer an “enterprise-quality custody” service for digital currencies. The service will be directed toward institutional investors.
Nomura announced in May this year that it is developing a custodial service for digital coins. Wall Street heavyweights JPMorgan Chase, Goldman Sachs, and Northern Trust have expressed their interest in these services.