The Chinese administration imposed a strict ban on crypto-exchanges last year and intended to drive them out of the mainland. However, the crypto-industry in China is evolving despite the ban.
InVault, a Shanghai-based cryptocurrency custody provider started offering its services last week in China despite the mainland ban. The start-up focuses to attract large-scale cryptocurrency exchanges as their prime customers, and firmly believes they should avoid the moral hazard of holding customers assets.
The main duty of a custodian is to hold customer’s assets, or cash in a secure and safe manner. The recent ban in China focuses on organizations that hold assets in the form of virtual currencies or which are possessed by firms that do not have legal status within the mainland.
In a conversation with the South China Morning Post Kenneth Xu, The Founder and Chief Executive of InVault, said that the sole solution to keep cryptocurrencies secure and safe is the absence of human supervision.
Mr Kenneth further stated, “Today, the vast majority of cryptocurrency exchanges globally still involve their senior management in managing the transfer of digital tokens ordered by clients. Putting the private keys to your cryptocurrency assets in the hands of senior management is akin to putting all your money in their control.”
InVault has found a way to avoid the ban of administration by creating a decentralized corporate cryptocurrency wallet service, which means there won’t be one central authority to safeguard the funds. The customer’s private keys will be under the supervision of InVault which later will be deposited in the physical vaults only accessible by a specific person.
The InVault launch occurred during tense circumstances. Many Chinese crypto-exchanges have worked under different domain names and even thought of outsourcing main functions to avoid the ban.
In a statement given to the localpress, Terence Tsang, the COO of TideBit, a crypto-exchange service provider in Taiwan and Hong Kong said, “The latest warning and potentially increased monitoring of foreign platforms is targeted at a batch of smaller exchanges that had claimed to be foreign entities, but are in fact operating in China claiming they have outsourced their operations to a Chinese company.”
In the meantime, InVault has bagged a major deal for the one million Ethereum tokens from an anonymous cryptocurrency exchange firm.