IBM Enters Crypto Custody Market

IBM crypto custody market blockchain Shuttle Holdings

Tech giant IBM has become one of the dominant forces in enterprise blockchain technology, working with businesses and organizations worldwide to develop and advance applications. Now, according to reports emerging this week, the company is moving into the crypto custody space.

Crypto custody services are used by institutional and other large-scale investors to protect cryptocurrency and other digital assets from hacking, theft and loss. The service also enables regulated institutions to invest in digital assets by providing independent, secure custodian services.

The custody platform has been developed by New York-based Shuttle Holdings, and is built on IBM infrastructure. While neither of the firms will be providing custody services directly to end users, the technology will create tools that can be used by those acting as custodians for end clients.

Brad Chun, chief investment officer at Shuttle, said there was a lengthy list of potential clients for the new platform.

“We have a list of selected clients that we are launching limited service with this month … (The platform is) not open to the public yet and there is a wait-list to get into our beta.”

IBM first presented the technology at last month’s Think 2019 conference, where it was introduced by CTO Nataraj Nagaratnam as a “prime use case” for the firm’s technology.

“What better example than taking a financial technology that is changing the world. Look at digital assets; how do you secure the data? … (This is) top of mind for a lot of people in the financial industry.”

However, the crypto custody services offered are not cold storage, and don’t benefit from the “air-gapped” security of storing private keys outside the network environment.

While this is ordinarily considered the most secure way to store crypto, Chun argued that “from a technology standpoint, it sounds a little oxymoronic.”

Instead, the platform will encrypt keys in multiple different layers to keep the funds under custody secure.

“There are always tradeoffs between security and efficiency, but we do not utilize a traditional cold storage system. Instead, we keep keys at rest encrypted in multiple layers as data blobs so that an organization can store these backups using their pre-existing disaster recovery and backup processes and media.”

The move is likely to appeal to those looking for a technology partner for offering crypto custody services, expected to become increasingly in demand as more companies and institutions look to invest in digital assets.