KudX, a Hong Kong-based cryptocurrency exchange, is currently developing a custodian solution that will serve as a bridge between institutional capital and the cryptocurrency markets. Big money is shy, and it needs battle-tested security if cryptocurrencies are to make it into an investment asset in the major league, and become incorporated into the financial mainstream.
That’s basically the primary reason why the industry needs custodial services.
A custodial service that KudX is planning to launch will turn it into a qualified custodian registered with the financial authorities, thus giving institutional investors much-needed regulatory clarity and peace of mind.
In more technical terms, the exchange will store investors’ assets on their behalf in a sort of secure, offline cold wallet. At first, KudX will offer fund managers and institutional investors custodial services for the top cryptocurrency – Bitcoin. If there is enough demand from the market, more coins will be added to the package later.
Investors will have easy online access to their funds so that they will be able to freely move the coins between their custodial and exchange accounts. Apart from that, it will be possible to stake cryptocurrencies that are based on proof-of-stake protocols, thereby generating extra income for their holders.
As a result of this effort, KudX will be able to offer a complete suite of financial services in pretty much the same way a traditional financial custodian does, but now with cryptos.