Casey Wagner

A bill in Illinois to revamp the state’s crypto licensing requirements advanced Wednesday evening, putting crypto companies on notice.&nbsp;



The Fintech-Digital Asset Bill requires exchanges and crypto businesses to obtain a license from the Illinois Department of Financial and Professional Regulation. The bill also outlines new risk protection and disclosure requirements for companies engaging with crypto.&nbsp;



The licensing requirements apply to businesses that facilitate crypto trading, crypto custodians, and any business “engaging in digital asset administration,” the <a href="https://ilga.gov/legislation/103/HB/PDF/10300HB3479lv.pdf" target="_blank" rel="noreferrer noopener">bill text</a> read. Licensed entities can also not store or facilitate trading of stablecoins unless the stablecoin is issued by an FDIC insured institution or another registered issuer and the issuer has fully-backed reserves at all times. 



Under the proposed law, exchanges are also required to submit documentation before listing assets to disclose any risks of the asset being considered a security and any conflicts of interest with the exchange and token. Additionally, exchanges must conduct a “comprehensive risk assessment designed to ensure consumers are adequately protected.”&nbsp;



“We do see a very active crypto and digital asset industry,” David DeCarlo, Illinois’ first regulatory innovation officer, said during an appearance on CNBC. “We are talking with New York…to try to put forth a regime that would complement what is happening in other states. We are not trying to reinvent the wheel, we want to be able to work with other regulators and then raise the bar nationally.”&nbsp;



The motivation behind the legislation is consumer protection, DeCarlo added, especially given the recent collapse of several crypto firms.&nbsp;



The major concern for crypto companies with operations in Illinois is that if the bill is passed, they will only have a matter of weeks to submit application materials for approval before the law is enforced, according to Web3 community group <a href="https://twitter.com/alliancedao/status/1633593323163205633?s=20" target="_blank" rel="noreferrer noopener">Alliance said</a>. 



If businesses are approved for a digital asset license in Illinois, the bill allows the state to access books and records and pass along relevant information to appropriate enforcement agencies.&nbsp;



The licensing requirements are reminiscent of New York’s BitLicense law passed in 2015. Any exchanges, issuers or custodians wishing to operate within the state are required to apply for the license.&nbsp;



As of Feb. 10, New York has issued virtual currency licenses to a total of 24 companies, including Paxos, Genesis and Coinbase. The New York Department of Financial Services, which oversees BitLicense issuance, did not respond to Blockworks’ request for comment about the timeline for approval or how many applications the regulator has received.&nbsp;



New Jersey, once a safe haven for crypto firms fleeing New York, is <a href="https://blockworks.co/news/new-jersey-crypto-bill-impacts">also proposing a licensing requirement</a> that takes the BitLicense one step further when it comes to crypto custody. A licensee offering digital assets custody must maintain “an amount of each type of digital assets sufficient to satisfy the aggregate entitlements of the persons to the type of digital asset,” the <a href="https://legiscan.com/NJ/text/A2371/id/2655313" target="_blank" rel="noreferrer noopener">proposed bill states</a>.



Illinois’ bill moved forward in the state House, Wednesday, after being introduced in mid-February. It is now on the calendar for a second reading and short debate.



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Is Illinois the Next New York? Inside the New IL Crypto Bill.

<div id="highlights-block_635c111075d85" class="highlights">
 <ul>
 <li>BNY Mellon reported that 70% of institutional investors surveyed would be interested in crypto if they had services from firms they trust</li>
 <li>TradFi is also hesitant to enter crypto without more regulatory clarity</li>
 </ul>
 
</div>



Institutional investors are looking for familiar names to provide their crypto services, and Wall Street is delivering.



BNY Mellon, America’s oldest bank and one of the more <a href="https://cms.blockworks.co/bny-mellon-digital-assets-are-coming-of-age/" target="_blank" rel="noreferrer noopener">crypto-friendly institutions</a>, said earlier this month that <a href="https://cms.blockworks.co/bny-mellon-moves-to-let-institutions-hold-bitcoin-ether/" target="_blank" rel="noreferrer noopener">select institutional clients</a> will be able to hold and transfer bitcoin and ether through its new crypto custody offering. Nasdaq said in September it would be looking into offering similar services. Boston-based State Street has been plotting its crypto custody plans since March 2022 when it <a href="https://newsroom.statestreet.com/press-releases/press-release-details/2022/State-Street-to-Develop-Digital-Custody-in-Collaboration-with-Copper.co/default.aspx" target="_blank" rel="noreferrer noopener">revealed</a> its partnership with crypto-native Copper.&nbsp;



The trend is not surprising, Talia Klein, BNY Mellon’s head of digital asset custody commercial product, said during a <a href="https://cms.blockworks.co/webinars/cryptos-institutional-landscape-liquidity-security-scalability/" target="_blank" rel="noreferrer noopener">Blockworks webinar</a> this week.&nbsp;



“We&#8217;re seeing a lot of institutional interest [in crypto,]” Klein said. “As you think about what is prohibiting others from getting into the space, what we&#8217;ve seen is that people require an institutional grade provider.”&nbsp;



In a research <a href="https://www.bnymellon.com/content/dam/bnymellon/documents/pdf/insights/migration-digital-assets-survey.pdf?mkt_tok=MzUzLUhSQi03OTIAAAGHvmLXAzH2AAbtr4WhHPMQ9VVq5uJ1KZRfRulJLv16X1_ZoOjbzOvT6K_QZLbyEh56IoS06me2xKP5MVsRYWOmWjfHUvagHGV1EWrMvzGY" target="_blank" rel="noreferrer noopener">report</a> published alongside its custody announcement, BNY Mellon reported 70% of institutional investors surveyed would “increase their digital asset activity if services like custody and execution are available from recognized, trusted institutions.”&nbsp;



Institutional investors are more concerned about getting into crypto in a safe and compliant manner instead of jumping in immediately with hopes of high returns, Matthew Savarese, vice president and global head of strategy at Nasdaq, added.&nbsp;



“Twelve months ago, everyone was worried about how to get into the space in the quickest way possible,” Savarese said. “Now, with the so-called crypto winter, people are taking a step back to say, ‘All right, let&#8217;s assess to make sure that we&#8217;re solving for information security, market fragmentation, liquidity, understanding what credit intermediation is, what quality execution looks like.’”&nbsp;



More options are available today, Savarese added, from both traditional financial institutions and crypto-native companies.



The current regulatory environment is also weighing on institutional investors and slowing their entry into the space, webinar panelists agreed.&nbsp;



“Whenever you&#8217;re operating in an environment like this, where this industry is rapidly evolving…we’re trying to stay one one step ahead,” said Geoffrey Clauss, chief revenue officer at blockchain infrastructure provider Blockdaemon.



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BNY Mellon, Nasdaq Say Institutions Want TradFi To Handle Their Crypto

Ornella Hernandez

<div id="highlights-block_63596e2992aa6" class="highlights">
 <ul>
 <li>NFTs are held in customers&#8217; bank accounts, just like any other digital assets</li>
 <li>The bank will only accept ERC-721 NFTs, the same token standard powering Bored Ape Yacht Club NFTs</li>
 </ul>
 
</div>



Swiss fintech bank SEBA will now custody NFTs just like any other customer deposit — but only Ethereum collections including Bored Ape Yacht Club (BAYC).



The bank became one the first banks in Switzerland to secure an institutional license to custody digital assets for Swiss-based funds and institutional investors in 2021.&nbsp;



Now, SEBA <a href="https://www.seba.swiss/media-and-investors/seba-bank-brings-regulated-custody-to-blue-chip-nfts" target="_blank" rel="noreferrer noopener">says</a> it’s the first regulated bank to offer NFT custody. Both individuals and institutions can hold their non-fungible tokens in their bank accounts and manage them alongside other digital assets such as stablecoins, bitcoin and ether.



Via an institutional-grade custody platform, the bank allows safe storage of any client’s Ethereum-based NFT “without the hassle of managing private keys themselves,” SEBA said.



The bank will only accept ERC-721 NFTs, the same token standard powering top collections such as Bored Ape Yacht Club and CloneX. SEBA supports over 16 cryptocurrencies and specializes in bitcoin custody and lending, with a small <a href="https://cms.blockworks.co/seba-bank-enables-ether-staking-as-merge-nears/" target="_blank" rel="noreferrer noopener">selection</a> of staking options.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
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</div></figure>



SEBA said it’s responding to a “clear demand for trusted custody solutions,” as stated in the press release. This new feature is aimed at institutional investors looking to safeguard their blue-chip tokens and “include them in the total wealth picture” their portfolios represent.



The move comes on the heels of a recent brief hype within the NFT market fueled by <a href="https://cms.blockworks.co/reddit-makes-pfp-nfts-cool-again-marketplace-trading-volume-surges/" target="_blank" rel="noreferrer noopener">Reddit’s NFT marketplace trading volumes</a> and <a href="https://cms.blockworks.co/azuki-nfts-set-the-record-for-most-expensive-skateboards-in-history/" target="_blank" rel="noreferrer noopener">Azuki’s record-setting sales</a>. Indeed, the <a href="https://nftgo.io/analytics/market-overview" target="_blank" rel="noreferrer noopener">number</a> of NFT holders keeps growing — despite the bear market.



Correction: CryptoPunks are ERC-20 NFTs, not ERC-721 NFTs. Updated Oct. 26 at 2:18 pm ET.



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Swiss Bank SEBA Now Custodies Blue-chip Ethereum NFTs

Ben Strack

<div id="highlights-block_6343fda5130bf" class="highlights">
 <ul>
 <li>Anchorage’s new executive was most recently the chief technology officer at tech company Clear</li>
 <li>Allowing institutions to keep assets away from potential attackers while still participating in on-chain activities is critical, Jouhal says</li>
 </ul>
 
</div>



Anchorage Digital hired a new head of engineering who is focused on scaling the team, as the crypto platform seeks to target <a href="https://cms.blockworks.co/anchorage-co-founder-institutions-becoming-more-sophisticated-about-crypto/" target="_blank" rel="noreferrer noopener">“more sophisticated”</a> institutions looking for secure crypto infrastructure.



CJ Jouhal was most recently chief technology officer at tech company Clear, where he led the engineering team as it went public in June 2021. Jouhal has also worked in senior leadership positions at other tech companies, including Zocdoc, Audible, and eBay.&nbsp;



Anchorage, which sought to triple the size of its engineering team this year, has so far doubled the unit’s headcount in 2022, a company spokesperson told Blockworks.



The company, founded in 2017, focuses on custodying digital assets. It seeks to support new cryptocurrencies and continue building client partnerships using its application programming interfaces (APIs).



Keep reading for excerpts from Blockworks’ interview with Jouhal.&nbsp;



Blockworks: Why did you choose to jump into crypto from Clear?



Jouhal: My time at Clear was centered around scaling the technology stack and enhancing the platforms to safely and securely use biometrics.



While there are differences between Anchorage and Clear, I see parallels between the two. Anchorage is also focused on unlocking new efficiencies by bridging the world of Wall Street and crypto. Anchorage is leading the way for safe and secure institutional participation in the crypto economy.



So being able to dive into a world where I can make a tremendous impact at bridging those two worlds was an opportunity I couldn’t pass up, to be honest.



I am new to the crypto industry. I have been diving into books and learning. A challenge on its own is becoming a domain expert, which I want to do very, very quickly.



Blockworks: What will you be most focused on in your new role?



Jouhal: My top priority is going to be to carefully scale the engineering organization by attracting and retaining the top talent. Anchorage set a goal of hiring 100 people in one year, and we’re on track to meet that goal…so for me, it’s important to continue on that path.



When you grow at this scale, it’s key to make sure that as everyone’s onboarding and joining, they can become efficient and impactful immediately without feeling isolated, especially in this world of hybrid [working].



Blockworks: What type of talent are you looking for?



Jouhal: When I look at who we’re targeting, the skill sets definitely vary; we have back-end engineers [and] front-end engineers.



We’re definitely going with a very broad brush with who we’re targeting, and we’re seeing a lot of inbounds too, which shows the interest still lies in the technology world of entering the crypto space. It’s not necessarily industry-focused when we’re looking at talent.



Blockworks: What other priorities do you have in the new position?



Jouhal: What really makes us different is taking a security-first approach to proving custody and making sure it’s done in a very scalable manner as well. That to me drives a lot of what we’re building for institutions to adopt, because this is a hard problem.



We’re working with every type of institutional partner…We want to build [our product] so it’s not just secure, but it scales to what the financial institutions need and want. If you keep your assets offline in cold storage, it restricts your ability to participate on-chain, and our goal is to bridge that gap so that you can safely and securely keep your assets out of potential attackers while still participating in on-chain activities.



Blockworks: What do you make of some of the <a href="https://cms.blockworks.co/tag/hacks" target="_blank" rel="noreferrer noopener">crypto hacks</a> this year?



Jouhal: &nbsp;Hacks are a top-of-mind concern for the industry. That’s precisely why Anchorage has a robust review process for new assets. If a security issue comes up for a new protocol, Anchorage is there to help as a trusted, time-tested, and regulated partner.



Blockworks: What are you keeping your eye on in the coming months?



Jouhal: We are a regulated digital asset platform, and from that perspective we are leading in the industry of ensuring that regulations are adhered to and helping define some of those regulations too. I am closely watching that to understand how the government moves forward with some of the plans…and hopefully quickly.



The second thing is that continuing to bridge the gap between digital assets and what would be traditional fintech and traditional financial services in a manner where we can have an impact across multiple industries is important for me.



Understanding the crypto and blockchain space and seeing how we can leverage our offering to break into more industries and continue to bridge the gap between what traditional technology does — even something such as mortgages, real estate or deeds.



This interview has been edited for clarity and brevity.



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Anchorage Digital’s New Engineering Head Focused on Scaling Team, Security

<div id="highlights-block_62b2cc0a97167" class="highlights">
 <ul>
 <li>This is the first US-qualified custody solution that can be paired with hot wallets, BitGo said</li>
 <li>Although crypto markets have slumped in recent weeks, BitGo&#8217;s CPO is confident that NFTs will hold on to their momentum</li>
 </ul>
 
</div>



BitGo has launched an NFT hot wallet and custody solution for developers, retail marketplaces and institutions, the digital asset security and liquidity provider announced Wednesday. BitGo is launching the solution in partnership with Parallel Finance, a decentralized lending and staking protocol.&nbsp;



This is the first US-qualified custody solution that can be paired with hot wallets, <a href="https://cms.blockworks.co/?s=BitGo" target="_blank" rel="noreferrer noopener">BitGo</a> Chief Product Officer Chen Fang said. BitGo currently services 700 institutional clients, Fang said. 



Clients can interact with decentralized marketplaces such as OpenSea and LooksRare through BitGo’s new wallet service, similar to how MetaMask users can integrate their wallets, but Fang said BitGo’s solution is the safer choice. 



“These people using MetaMask are using pretty insecure solutions to store hundreds of thousands of dollars, if not millions of dollars, of NFTs,” Fang said. “[They] will now have this amazing place to keep treasured possessions.”&nbsp;



The hot wallet allows retail and institutional investors to receive, hold and send NFTs (non-fungible tokens). It uses multi-signature security and 24/7 withdrawal access and support, similar to BitGo’s other cryptocurrency custody services, Fang said. 



The expansion of services is reflective of market demand for more sophisticated services, Fang said. Investors are starting to take more ownership over their assets&#8217; storage and security, he added. 



“When there is an institutional investor that&#8217;s throwing in $20 [million] or $30 million, or even $100 million worth of value and converting it into bitcoin, obviously you don&#8217;t really want to keep it on single-signature wallets,” Fang said. “You don’t want to keep these assets on a <a href="https://en.wikipedia.org/wiki/Air_gap_(networking)" target="_blank" rel="noreferrer noopener">non-air gapped</a> internet connected device, so this is where BitGo came into existence, and with our technology have welcomed institutional investment in this asset class.” 



Although cryptocurrency markets have experienced a downturn in recent weeks, Fang is confident that the NFT momentum will continue in the long run.&nbsp;



“Given where the prices are, despite overall market conditions, the prices for some of these top tier NFTs are still pretty high,” Fang said. “We&#8217;re talking about a couple hundreds of thousands of dollars, if not a couple millions of dollars of assets that you want to protect. You don&#8217;t want to keep a couple of million dollars worth of assets on your Chrome browser.”



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BitGo Launches First NFT Custody Platform for US Institutions

Sebastian Sinclair

<div id="highlights-block_623157da34aae" class="highlights">
 <ul>
 <li>The crypto custodian said it has raised tens of millions of dollars to scale operations and obtain additional licenses</li>
 <li>While Animoca Brands and Liberty City Ventures co-led, the round also saw participation from Ripple, Terra and Morgan Creek, among others</li>
 </ul>
 
</div>



Hong Kong-based crypto custodian Hex Trust said it has raised tens of millions of dollars in fresh capital to scale its operations to the Middle East and Europe, according to a <a href="https://hextrust.com/resources-collection/hex-trust-raises-88-million-series-b-funding-scale-asias-leading-digital-asset-custodian" target="_blank" rel="noreferrer noopener">statement</a> on Tuesday.



The Series B funding round, co-led by Animoca Brands and Liberty City Ventures, garnered $88 million in capital, which saw its valuation rise to $300 million.



It marks the company&#8217;s first significant raise and is consistent with growing interest from outside parties seeking to invest in platforms and technology used in the safekeeping of digital assets.



Participants in the round also included Ripple, Terra, Morgan Creek, Primavera Venture Partners, LeadBlock Partners, Eterna Capital, Sino Global Capital, Topaz and real estate giant New World Development&#8217;s CEO Adrian Cheng, among others.



Funding will also be used to obtain additional licenses and expand Hex Trust&#8217;s business services as well as continue the development of its &#8220;bank-grade&#8221; custody platform HexSafe.



Provider of licensed and insured bank-grade custody solutions for crypto, Hex Trust has continued to lure investment from venture capitalists and crypto firms looking to take a punt on the four-year-old company.



Last year, Hex Trust nabbed $6 million via Series A funding and a further $10 million in an extended round led by Animoca in a bid to further branch out across South-East Asia. The company also tapped the <a href="https://cms.blockworks.co/custodian-hex-trust-launches-digital-assets-pilot-with-philippines-union-bank/" target="_blank" rel="noreferrer noopener">Union Bank of the Philippines</a> to assist in the expansion of its custody services in that country.



Hex Trust currently employs 100 people across offices based in Hong Kong, Singapore and Vietnam.



&#8220;It was a tremendous year of growth for Hex Trust and this funding round enables us to continue scaling,&#8221; said Hex Trust CEO Alessio Quaglini.



<blockquote class="wp-block-quote">&#8220;As large institutions continue adopting digital assets at an increased pace, they need fully licensed custody services to meet compliance and regulatory standards.&#8221;</blockquote>



Digital asset custodians continue to attract large investors, oftentimes accompanying significant capital raises. In January, crypto custodian Fireblocks&nbsp;raised a staggering $550 million in a Series E round co-led by D1 Capital Partners and Spark Capital, which saw the company valued at $8 billion.



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Hex Trust Raises $88M in Series B To Expand into Europe, Middle East

<div id="highlights-block_61f95dad5c463" class="highlights">
 <ul>
 <li>NYDIG survey found 54% of bitcoin holders want a portion of their salary paid in the digital asset</li>
 <li>Financial services companies Q2, MVB Bank and Vantage Bank are among the firms offering the option</li>
 </ul>
 
</div>





There’s a new means for employees to get paid in bitcoin, thanks to <a href="https://nydig.com" target="_blank" rel="noreferrer noopener">NYDIG</a>.



The bitcoin-focused financial services firm has partnered with a number of companies that will for the first time give their employees the option to receive a percentage of their post-tax earnings in bitcoin.&nbsp;



More than one-third of workers between the ages of 18 and 29 expressed an interest in getting some of their salary in bitcoin, according to a recent <a href="https://nydig.com/research/bitcoin-benefits-2022-survey" target="_blank" rel="noreferrer noopener">survey</a> by the New York company. There’s a sharp dropoff when it comes to older employees, with just 11% of workers over 60 saying they would consider doing so.



Fifty-four percent of bitcoin holders overall want a portion of their salary paid in the digital asset, the survey found.



Though not a novel concept, it is another example of a major crypto company allowing employers to pay their workers using cryptocurrency. Other companies offering this service include Coinbase, BitWage and BitPay, and payments processor Strike allows employees to convert paychecks to crypto themselves.



A NYDIG spokesperson did not immediately return Blockworks’ request for comment on how its new offering differs from others.



Patrick Sells, NYDIG’s chief innovation officer, called the service an “easy-to-adopt” perk for employers that helps businesses “stand out from the pack while providing their employees with a critical tool for protecting their financial futures.”&nbsp;



NYDIG delivers technology and financial services to businesses through its full-stack bitcoin platform. NYDIG completed a <a href="https://cms.blockworks.co/nydig-closes-1b-funding-round-raising-valuation-above-7b/" target="_blank" rel="noreferrer noopener">$1 billion growth equity funding round</a> led by WestCap in December, bringing its valuation to more than $7 billion.



The offering allows employees to choose what percentage of their after-tax pay they would like to convert to bitcoin, which is held in cold storage by NYDIG. There are no transaction or storage fees on the bitcoin traded and held by the workers, according to the company.&nbsp;



NYDIG employees can also use the service. Other companies using the savings plan include financial services companies Q2, MVB Bank and Vantage Bank, as well as crypto companies like bitcoin miner Iris Energy and crypto data company The TIE.



Companies owned by former NFL quarterback Drew Brees are also in on the offering.



Fertitta Entertainment will share the benefit with workers of the Houston Rockets — the NBA team <a href="https://cms.blockworks.co/houston-rockets-partner-with-nydig-through-bitcoin-paid-deal/" target="_blank" rel="noreferrer noopener">NYDIG recently partnered with</a> — and to corporate employees of restaurant company Landry&#8217;s.



New York City Mayor Eric Adams said<a href="https://cms.blockworks.co/nyc-mayor-receives-first-paycheck-in-converted-eth-btc/" target="_blank" rel="noreferrer noopener"> on Jan. 20</a> that his first paycheck would be converted into bitcoin and ether through Coinbase. The crypto exchange <a href="https://blog.coinbase.com/now-get-your-paycheck-deposited-into-coinbase-116fe1d073ce" target="_blank" rel="noreferrer noopener">began</a> accepting paycheck deposits last year.



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Workers Can Get Paid in Bitcoin Via New NYDIG Offering

<div id="highlights-block_61eb2c02567d8" class="highlights">
 <ul>
 <li>Japanese investment bank Nomura launched Komainu, a joint venture with CoinShares and Ledger, in 2020</li>
 <li>Matthew Chamberlain held various leadership roles over nine years at London Metal Exchange, including CEO, COO and head of business development </li>
 </ul>
 
</div>



Digital asset custodian <a href="https://www.komainu.com">Komainu</a> has tasked incoming CEO Matthew Chamberlain with adding services for institutions eyeing a digital assets expansion.



Chamberlain is set to officially join Komainu later in the first quarter, a spokesperson told Blockworks. Henson Orser, <a href="https://cms.blockworks.co/gone-crypto-why-orser-left-nomura-to-head-komainu/">Komainu’s acting CEO</a>, will transition to president.&nbsp;



The former head of the London Metal Exchange (LME) said Komainu’s regulated institutional custody platform and its hybrid servicing model combines the best of traditional and decentralized finance.



&#8220;I believe strongly in the transformative capacity of a blockchain-empowered world,” Chamberlain said in a statement. “But such technologies will only deliver their true potential when robust infrastructure exists to make them easily and reliably available to all those who wish to participate in this unprecedented period of financial democratization.”



The hire comes after Komainu raised $25 million in its Series A funding round last March. Alan Howard, co-founder of Brevan Howard and Elwood Asset Management, led the round.



The incoming CEO spent the last nine years at the <a href="https://www.lme.com">LME</a>. Most of the world’s non-ferrous metals business is conducted on the LME, totalling $11.6 trillion in 2020.



He served as LME’s CEO for the last five years, and previously worked as its chief operating officer, head of business development and head of strategy and implementation.



Chamberlain began his career at Citibank and went on to work for Perella Weinberg Partners and UBS, where he was involved in mergers and acquisitions with a focus on exchanges and financial market infrastructure.&nbsp;



“The digital asset industry is maturing and needs experienced professionals to support the institutionalization shift at work,” CoinShares CEO Jean-Marie Mognetti said in a statement.&nbsp; “Matthew&#8217;s professional background is key for Komainu’s development towards financial institutions.”



Japanese investment bank Nomura announced the launch of Komainu, a joint venture with CoinShares and Ledger, in 2018. The service, based in Channel Islands, officially launched in June 2020.&nbsp;

CEO of London Metal Exchange Latest Finance Exec to Join Crypto Firm

<div id="highlights-block_61e7749870c40" class="highlights">
 <ul>
 <li>Nexo will use Bakkt&#8217;s Warehouse to safeguard its user&#8217;s crypto</li>
 <li>The custodian joins Nexo&#8217;s growing list including BitGo and Fidelity Digital Assets</li>
 </ul>
 
</div>



Cryptocurrency loans, lending and exchange platform Nexo has tapped Bakkt&#8217;s custodial services to safeguard its customer&#8217;s ether and bitcoin holdings.



The digital assets are to be held in the Bakkt Warehouse, the company&#8217;s custody platform, according to a statement on Wednesday. Bakkt was founded by the&nbsp;Intercontinental Exchange, the parent company of the New York Stock Exchange.



Bakkt said its warehouse comprises both online (warm) and offline (cold), &#8220;air-gapped&#8221; digital asset storage and acts to rebalance between warm and cold storage tiers to minimize the risks associated with holding assets online.



&#8220;We recognized that Bakkt’s infrastructure and regulation-first approach to crypto was a natural fit,&#8221; said George Manolov, Nexo&#8217;s business development executive. &#8220;We’re confident that this partnership will benefit all our clients and expand Nexo’s ability to service the unprecedented institutional demand for cryptocurrencies.&#8221;



According to data by <a href="https://www.blockdata.tech/blog/general/crypto-custody-providers-compared-2021" target="_blank" rel="noreferrer noopener">provider Blockdata</a>, 8-10% of all crypto, roughly $250 billion out of $2.1 trillion are now held by compliant custodians.



Crypto exchanges including Nexo, Bitstamp and Crypto.com rely heavily on third-party custodians to safeguard their user&#8217;s digital assets. Hedge funds, institutional investors and corporates trading or investing in millions also use custodians in order to offset the risk associated with storing large amounts of crypto, as they are typically insured by the provider.



Nexo already relies on Galaxy Digital&#8217;s BitGo for custodial services as well as Fidelity Digital Assets, which <a href="https://cms.blockworks.co/nexo-partners-with-fidelity-digital-assets/" target="_blank" rel="noreferrer noopener">partnered with Nexo</a> in December to develop compliant infrastructure for institutional investors seeking exposure to crypto.



“The cryptocurrency market continues to expand at a robust pace leading reputable crypto companies to diversify custody of assets,&#8221; said Dan O’Prey, Chief Product Officer of Crypto at Bakkt in the statement. &#8220;We are pleased that Nexo has chosen the Bakkt Warehouse as a trusted solution.”



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Nexo Taps Bakkt to Custody Customers’ Ether and Bitcoin

<div id="highlights-block_2017feda4c59227eba096521b2b4eded" class="highlights">
 <ul>
 <li>BitMEX executives are planning on buying a 268-year-old bank</li>
 <li>Pending regulatory approval, BXM Operations AG will purchase Bankhaus von der Heydt for an undisclosed amount </li>
 </ul>
 
</div>



BitMEX’s top brass is laying the groundwork for the company’s European expansion.



BXM Operations AG, the company founded by BitMEX CEO Alexander Höptner and CFO Stephan Lutz, announced plans on Tuesday to acquire German bank Bankhaus von der Heydt.&nbsp;



The acquisition of the 268-year-old bank is the first step toward creating a one-stop shop for regulated cryptocurrency products across Germany, Austria and Switzerland, the <a href="https://blog.bitmex.com/bxm-operations-intends-purchase-german-bank-bankhaus-von-der-heydt/" target="_blank" rel="noreferrer noopener">company said</a>. 



“Through combining the regulated digital assets expertise of Bankhaus von der Heydt with the crypto innovation and scale of BitMEX, I believe we can create a regulated crypto products powerhouse in the heart of Europe,” Höptner said in a statement.&nbsp;



Bankhaus von der Heydt is no stranger to digital assets. In October, the Munich bank revealed plans to <a href="https://cms.blockworks.co/bankhaus-von-der-heydt-will-custody-crypto-with-fireblocks/">expand into crypto</a> banking through a custody deal with Fireblocks, becoming one of the first banks to offer crypto services in the region. In addition to custody, Bankhaus von der Heydt currently offers blockchain payments services.



BitMEX is particularly looking to Germany to begin its European expansion, given the country’s business-friendly economy, Lutz said. BXM Operations AG is headquartered in Germany.&nbsp;



The announcement is in line with a <a href="https://cms.blockworks.co/how-booming-exchanges-are-prepping-for-a-bear-market/">growing trend</a> of cryptocurrency companies expanding into traditional banking services. Crypto exchanges including Coinbase and Kraken now offer lending and prime brokerage services, for example.&nbsp;



BXM Operations AG and Bankhaus von der Heydt’s current owner, Dietrich von Boetticher, have agreed on terms — pending approval from German regulator BaFun.&nbsp;



Bankhaus von der Heydt will continue its banking operations after the deal is finalized, according to BXM Operations AG. Höptner and Lutz will serve on the bank’s supervisory board.&nbsp;



The acquisition is expected to be finalized by the middle of the year. Terms of the deal were not disclosed.&nbsp;

BitMEX Execs Plan to Acquire One of Germany’s Oldest Banks

Macauley Peterson

<div id="highlights-block_61b8d639680c1" class="highlights">
 <ul>
 <li>Genesis cleared a significant regulatory hurdle with Financial Conduct Authority (FCA) approval</li>
 <li>Customers of BBVA Switzerland can now custody bitcoin and ether with the giant multinational bank</li>
 </ul>
 
</div>



The secure custody of digital assets is a critical infrastructure component enabling banks to offer regulatory compliant services at scale. Many investors, whether individuals or companies, cannot bear the burden of self-custody of digital assets, which is why custodial solutions like Genesis’ are key to allowing banks like BBVA to offer these assets.



<h3>Genesis Custody gets UK FCA OK</h3>



The digital prime brokerage Genesis Trading, a subsidiary of <a href="https://cms.blockworks.co/?s=Digital+Currency+Group" target="_blank" rel="noreferrer noopener">Digital Currency Group</a> (DCG), announced Monday that the UK’s Financial Conduct Authority (FCA) approved its Genesis Custody cryptoasset business. The FCA oversees about 51,000 financial services firms and financial markets in the country and has required crypto-related businesses to register since 2020.



<blockquote class="wp-block-quote">“[FCA] approval signifies that Genesis possesses strong controls, governance and a compliance framework committed to countering financial crime, and that the firm meets the same anti-money laundering standards as other financial institutions under the FCA’s purview,” a spokesperson for Genesis told Blockworks.</blockquote>



Genesis noted that only &#8220;a handful&#8221; of the 24 companies that have completed the <a href="https://register.fca.org.uk/s/search?predefined=CA" target="_blank" rel="noreferrer noopener">FCA registration process</a> are providers of custody services.



The firm acquired Vo1t, a custody service provider based in London in May 2020, to form the basis of Genesis Custody. Since then, Genesis Custody has onboarded about 100 customers and achieved quarter-over-quarter growth of 50% in the third quarter of 2021, <a href="https://genesistrading.com/genesis-custody-approved-by-uk-fca-as-registered-cryptoasset-business/" target="_blank" rel="noreferrer noopener">according to a statement</a>. However, Genesis does not disclose examples of clients that custody with the firm.



&#8220;This is an important milestone in our strategy to deliver to institutional clients cryptocurrency services that are compliant with the regulatory framework,” said Arianna Pretto-Sakmann, General Counsel at Genesis in the statement.



Genesis has <a href="https://genesistrading.com/crime-and-vault-risk-insurance/" target="_blank" rel="noreferrer noopener">obtained up to $600 million</a> of insurance coverage, enough to cover all assets in its custody, according to the company website.



<h3>BBVA offers EU-wide custody for ether</h3>



BBVA Switzerland, the Swiss subsidiary of Spanish multinational financial services company Banco Bilbao Vizcaya Argentaria, announced that its New Gen account product will now allow customers to invest directly in ether.



BBVA is the first traditional bank in Europe to offer ether custody services directly through a retail account, <a href="https://www.bbva.com/en/bbva-switzerland-adds-ether-to-its-cryptocurrency-custody-and-trading-service/">according to a statement</a>.



<blockquote class="wp-block-quote">“We decided to add ether to our cryptoasset ‘wallet’ because, together with bitcoin, they are the protocols that spark the most interest among investors, while also offering all the guarantees to comply with regulation,” BBVA Switzerland CEO Alfonso Gómez said in the statement.</blockquote>



The wallet, in this case, refers to the custodial service of BBVA, which uses institutional infrastructure provider <a href="https://www.metaco.com/" target="_blank" rel="noreferrer noopener">METACO</a> for its custody needs and will manage the private keys controlling users’ funds.



The bank points to the clear regulation and high adoption thresholds in Switzerland as the reason for offering this new service in the Confederation. The accounts will be available throughout Europe, but also Turkey and across Latin America.



<hr class="wp-block-separator"/>



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<hr class="wp-block-separator"/>

Crypto Custody Expands in UK, EU with Genesis, BBVA Switzerland

Sam Reynolds

<div id="highlights-block_61964dccecf74" class="highlights">
 <ul>
 <li>Anchorage is a major player in digital asset custody, and now on the radar of major Wall Street firms</li>
 <li>KKR&#8217;s total assets under management reached $459 billion in Q3, 2021</li>
 </ul>
 
</div>



Private equity firm KKR &amp; Co is set to lead an investment round into digital asset bank <a href="https://cms.blockworks.co/?s=Anchorage" target="_blank" rel="noreferrer noopener">Anchorage</a>, which would value the bank at $3 billion, <a href="https://www.theinformation.com/articles/kkr-plans-to-lead-investment-in-crypto-firm-anchorage" target="_blank" rel="noreferrer noopener">The Information reports</a>.



This move by KKR continues the firm’s interest in digital assets. In September, <a href="https://cms.blockworks.co/private-equity-firm-kkr-invests-in-defi-and-blockchain-focused-parafi-capital/" target="_blank" rel="noreferrer noopener">Blockworks reported that KKR has invested</a> as a limited partner in ParaFi Capital’s flagship fund. ParaFi manages about $1 billion and focuses on decentralized finance and blockchain technology. Recently, the <a href="https://cms.blockworks.co/parafi-to-launch-200-million-growth-fund/" target="_blank" rel="noreferrer noopener">company has been making moves</a> to launch a $200 million growth fund. 



ParaFi’s founder Ben Forman was once KKR’s research head, and the firms are said to maintain close ties.&nbsp;



Anchorage has attracted significant institutional interest since its inception. Earlier this year Singapore’s GIC, one of its sovereign wealth funds that’s a low-risk, blue-chip investor, closed an $80 million round into the bank, <a href="https://cms.blockworks.co/gics-anchorage-investment-sheds-light-on-future-of-digital-assets/" target="_blank" rel="noreferrer noopener">Blockworks reported</a>. Within Asia, GIC is considered to be a very conservative investor looking for infrastructure plays, whereas its cousin, Singapore’s Temasek, is compared to Masayoshi Son’s Softbank preferring big bold bets.&nbsp;



The Information also reported that Fireblocks, a custodian, is in the process of raising a round with a valuation of $8 billion.&nbsp;&nbsp;&nbsp;



To date, Anchorage has raised $137 million over four funding rounds, according to <a href="https://www.crunchbase.com/organization/anchorage">Crunc</a><a href="https://www.crunchbase.com/organization/anchorage" target="_blank" rel="noreferrer noopener">h</a><a href="https://www.crunchbase.com/organization/anchorage">base Pro</a>.&nbsp;The regulated custody of digital assets remains a significant barrier to mainstream adoption. In the US, major baking regulators FDIC, Federal Reserve and Office of the Comptroller of the Currency have been <a href="https://www.reuters.com/business/finance/us-regulators-exploring-how-banks-could-hold-crypto-assets-fdic-chairman-2021-10-26/" target="_blank" rel="noreferrer noopener">exploring</a> how best to coordinate supervision of banks that want to provide custody services. Previously, the OCC took proactive steps to establish a “<a href="https://cms.blockworks.co/occ-to-unveil-bank-charter-for-crypto-financial-services-firms/" target="_blank" rel="noreferrer noopener">crypto bank charter</a>” with Anchorage and Paxos <a href="https://cms.blockworks.co/paxos-gets-occ-approval-for-a-bank-charter/" target="_blank" rel="noreferrer noopener">two prominent recipients</a> earlier this year. 



Anchorage PR representatives, reached by Blockworks, declined to comment.



This story was updated <meta charset="utf-8">on November 18, at 11:09 am ET.



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KKR Leads Anchorage Series D Raise at $3B valuation

<div id="highlights-block_615c81996aece" class="highlights">
 <ul>
 <li>Bitcoin currently has the greatest client demand, according to US Bank Strategy Chief Christine Waldron, though the company will evaluate offering custody for additional coins in the future</li>
 <li>US Bank previously announced that it would administer NYDIG’s bitcoin ETF and participated in a funding round for crypto firm Securrency</li>
 </ul>
 
</div>



US Bank rolled out its crypto custody services for fund managers on Tuesday, as one of the country’s largest banks doubles down on its commitment to the space.



The custody services are intended for institutional investment managers with private funds in the US or Cayman Islands who would like to secure their bitcoin, according to the company. The Minneapolis-based bank has selected <a href="https://nydig.com" target="_blank" rel="noreferrer noopener">NYDIG</a> as the first crypto sub-custodian announced in its network of providers.



US Bank Wealth Management and Investment Services had about $8.6 trillion in assets under custody and administration and $282 billion in assets under management, as of June 30.



The company’s investment management clients have studied investor demand and are working to accommodate their own clients’ interest in cryptocurrency, Christine Waldron, the bank’s chief global strategy officer, said in an email.



<blockquote class="wp-block-quote">“Bitcoin is the coin that we are seeing the greatest client demand for today,” she explained. “We will continue to evaluate additional coins from both a client demand and a risk perspective, and will add coins once and if they satisfy our stringent risk standards.”</blockquote>



NYDIG provides bitcoin technology and financial services solutions to banks, insurers, corporations and institutions. <a href="https://cms.blockworks.co/nydig-and-fiserv-team-up-to-put-bitcoin-in-consumers-bank-accounts/" target="_blank" rel="noreferrer noopener">NYDIG and Fiserv</a> revealed in June they were teaming up to help consumers get bitcoin into their bank accounts. Later that month, the National Cash Register (NCR) and <a href="https://cms.blockworks.co/nydig-and-ncr-bringing-bitcoin-to-the-people/" target="_blank" rel="noreferrer noopener">NYDIG partnered</a> to help US banks offer bitcoin to clients.



“NYDIG is excited to partner with US Bank to provide its customers with a custody solution that meets the highest security, compliance and regulatory standards,” Robert Gutmann, the firm’s CEO, said in a statement.



US Bank has been developing its blockchain initiatives since 2015 as it “saw this trend coming,” Waldron <a href="https://cms.blockworks.co/u-s-bank-launches-crypto-custody-with-nydig/" target="_blank" rel="noreferrer noopener">previously told Blockworks</a>.&nbsp;&nbsp;



The company had announced in April that it would administer NYDIG’s bitcoin ETF this year, pending regulatory approvals. That same month, US Bank participated in <a href="https://cms.blockworks.co/state-street-u-s-bank-in-on-30m-securrency-raise/" target="_blank" rel="noreferrer noopener">a funding round</a> for blockchain-based financial and regulatory technology firm Securrency.



<h3>Testing the waters</h3>



Large traditional banks continue to dip their toes into the crypto realm.&nbsp;BNY Mellon, the world’s largest custodian bank, <a href="https://cms.blockworks.co/bny-mellon-offer-bitcoin-custody-this-year/" target="_blank" rel="noreferrer noopener">revealed plans</a> earlier this year to eventually treat digital assets like clients’ more traditional holdings by using a new platform that was in the prototype phase.&nbsp;



Rival bank State Street <a href="https://cms.blockworks.co/state-street-launches-digital-finance-unit-for-crypto/" target="_blank" rel="noreferrer noopener">created a new division</a> focused on the shift to digital finance in June. It later <a href="https://cms.blockworks.co/state-street-teams-with-lukka-to-expand-crypto-services/" target="_blank" rel="noreferrer noopener">partnered</a> with crypto asset data and software provider Lukka to help it provide digital and cryptocurrency asset fund administration capabilities for its private funds clients.



Most recently, Bank of America officially launched its <a href="https://cms.blockworks.co/bank-of-america-launches-cryptocurrency-research-effort/" target="_blank" rel="noreferrer noopener">coverage of digital assets</a> on Monday. Candace Browning, the bank’s global head of research, had called cryptocurrencies and digital assets “one of the fastest growing emerging technology ecosystems” in an internal memo obtained by Blockworks.



US Bank’s custody offerings round out the list of services that cryptocurrency funds need, such as accounting, administration and investor services, Waldron noted.



“We are continuing to stay close to cryptocurrency to evaluate further offerings more broadly in the investment services space,” she said.



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