In an effort to provide cold-storage custody solutions for U.S. clients, cryptocurrency safekeeping specialist Fireblocks intends to create a limited-purpose trust company under the New York Department of Financial Services (NYDFS). This new entity, Fireblocks Trust Company, is awaiting final regulatory approval before commencing operations.
Alongside this initiative, Fireblocks is launching the Global Custodian Partner Program, aiming to connect clients with licensed digital asset custodians worldwide. The program will integrate Fireblocks' technology and initial participants will come from several countries, including the U.S., the United Arab Emirates, Britain, Singapore, Thailand, and Australia. More custodians are expected to join this network in the future.
The move towards establishing a trust company and creating a global network of custodians reflects an industry-wide shift prompted by recent events like the collapse of the FTX crypto exchange. Notably, Fireblocks is recognized for promoting advancements in key-sharing technologies such as multiparty computation (MPC) to enhance security and risk management.
Fireblocks has traditionally been known as a software vendor but acknowledges the growing demand for custodial services due to regulatory and risk-related concerns within the digital asset market. This development is not an abandonment of their emphasis on self-custody innovation, as affirmed by Adam Levine, Fireblocks SVP of Partnerships.
The decision to enter the custodial space is also influenced by potential regulatory changes proposed by the Securities and Exchange Commission (SEC) that could limit choices for registered investment advisors (RIAs) in custody services. The outcome of these deliberations, associated with the SAB 121 proposals, might affect which institutions RIAs can rely on for managing their clients' crypto assets, possibly favoring registered broker-dealers and federally chartered banks over state-licensed providers.
