Bitcoin vault and analytics provider Elliptic will be providing its storage services to Crypto Facilities, a bitcoin derivatives exchange.
Elliptic’s vault service looks to maximize the safety of client holdings, which are held offline and physically secured. Earlier this year, it received accreditation for its storage standards from KPMG. The startup also says to have insurance coverage from a ‘Fortune 100 underwriter’. Recently, it partnered with Gem to build a joint multisignature wallet solution.
It has also diversified into analytics, launching a tool for transaction monitoring and compliance.
Its partnering with a crypto exchange may boost its vault service. Crypto Facilities, also based in the UK, offers trading in bitcoin forward contracts, which can be used for hedging existing positions. It says to allow up to 4x leverage.
In acting as custodian over client funds, bitcoins will not be stored in the same single hot/cold wallet scheme as traditionally done on crypto exchanges. Rather, each client gets their ‘segregated, ring-fenced account’, for which all activity is tracked on the blockchain.
The concept is similar to that employed by BitGo, whose multisignature solution for exchanges also assigns a separate address for each client. In this respect, such schemes are a step above those employed by fiat-based brokerages using the traditional banking system, where client funds are bundled into a single segregated account.
The per-client segregation scheme is likely to gain traction in the industry as it gravitates toward more robust security standards.