KB Bank to develop technology for safeguarding digital asset in partnership with Atomrigs
KB Kookmin Bank signed a strategic partnership deal with Atomrigs Lab, a company specializing in blockchain technology and projects, for custody services aimed to safeguard digital assets. Details of the deal? The partnership is aimed at developing technology to protect digital assets using secure multi-party computation (MPC) and ultimately creating a custody offering. KB Kookmin Bank hopes to strengthen its digital business and contribute to the growth of a strong technology ecosystem in the country. What is secure multi-party computation (MPC)? It refers to splitting the key to a cryptocurrency wallet to increase the level of security. Because the personal key is split into multiple pieces, it is impossible for the hacker to steal digital assets with one single piece. The private key is recoverable even if the wallet’s owner loses it. “The user and the custodian will split the key into two, so even if the exchange is hacked, the coins inside will be safe from theft,” said Atomrigs CEO Jung Woo-hyun. How did custody of digital assets work before? Custody refers to the act of financial institutes safeguarding or managing private assets. At the moment, traditional financial institutes do not offer this kind of service for digital assets. Instead, custody for digital assets was provided by cryptocurrency wallet companies and exchanges. Users controlling their own key face the risk of hacking or loss. Professional services were not for everyone. Bitgo, for example, requires a user control digital assets worth a minimum of one million dollars, whereas Coinbase requires 10 million dollars to request custody. Financial institutions are joining the business, and so is KB. As interest in digital assets grows, companies like IBM and traditional banks have started to eye the custody business. IBM announced last March that it would launch a beta version of a digital custody solution in partnership with Shuttle Holdings, a New York-based investment firm. ABN AMRO tried releasing a cryptocurrency custody wallet but closed it down in May. Jess’ note: Banks and exchanges should have distinctive roles. What can we imply from banks starting custody services? “Bank should focus on what they were already professionally good at: Know-your-client (KYC) and Anti-money laundering (AML),” said Atomrigs CEO Jung Woo-hyun. Exchanges have been managing and safeguarding cryptocurrencies, but in the future, they should focus on offering trading platforms. Banks profit from commissions and exchanges take transaction fees. The government can also benefit from traditional financial institutes tracking transactions, which are more specialized in asset safekeeping. The issue is security technology. KB Kookmin’s move can help it gain a lead in the short term. But if it manages to develop a system that combines its expertise in KYC and AML with the secure MPC technology of Atomrigs, in the long term, it may come up with a solution that solves the problems in digital asset management.