Crypto Custody Provider Ledger Extends Reach in Asia With New Institutional Client

Digital asset storage provider Ledger is partnering with FLETA, a South Korea-based blockchain platform, for decentralized applications (dapps) to provide custodian services compliant with local laws.

The French startup has been trying to extend the reach of its institutional-level services with Ledger Vault, building on the success of its nano wallets, which primarily targeted retail crypto holders. 

“Ledger does not just offer the security of storing crypto, it also allows financial institutions to build customized governance rules,” said Glenn Woo, Ledger’s managing director leading business expansions in the Asia-Pacific region. 

Founded in 2018, FLETA launched its mainnet in November and has partnered with the government to build a proof-of-concept network for the nation’s healthcare system, hoping to let hospitals share private data such as research and medical records.  

The firm confirmed to CoinDesk it held a private token sale in August 2018 and a public sale in 2019, but declined to disclose specific figures for the two funding rounds.     

Scaling up

Woo said the partnership with FLETA reflects Ledger’s shift in Asia towards helping large-scale institutional clients be compliant with regulators across different jurisdiction in the region. 

“We are helping crypto companies, such as exchanges, funds and custodians, to basically abide by the regulations when it comes to wallet management,” Woo said. “Our biggest priority is Ledger Vault.” 

Ledger is in the process of building a joint venture with the U.S.-based investment firm Global Advisors and Japanese financial services giant Nomura. The new firm, named Komainu, will offer digital asset managemnet services to institutional investors while helping clients integrate crypto with traditional investments instruments such as mutual funds.

According to Woo, one of the biggest concerns for financial institutions is regulatory risks, particularly at a time when many governments are still developing their guidelines for the emerging industry. 

Institutions that choose to be fully compliant may spend large sums of money securing legal opinions and setting up the proper infrastructure and reporting tools. 

Regulatory challenges

Two major issues regulators have with crypto companies are how to secure digital assets and how to protect investors’ interest when these assets are lost. 

Ledger claims its Vault offering requires multiple layers of authorization, which in turn requires a greater degree of involvement from a client’s operations team to withdraw assets. 

“One of the big themes when it comes to regulating crypto institutions on the wallet side is to remove the central point of failure where the CEO of an exchange knows everything,” Woo said. “With this infrastructure, we aim to go into more of the regulations jurisdiction where the crypto institutions are struggling to meet the requirements of the regulations.”

Woo said Ledger further backs up its clients’ assets with a customized insurance policy, referencing the company’s partnership with Lloyd’s of London syndicate Arch.

In November, insurance broker Marsh arranged a $150 million insurance policy from Arch for users on the Ledger Vault technology platform. 

“My experience is that insurance is actually very hard to get for many crypto startups because they don’t have a track record,” Woo said, noting insurance could be critical when a crypto company seeks approval for financial regulators.