DXM And Ledger Vault Launch ‘Upbit Safe’ A Crypto Custody Service For Institutional Investors

The cryptocurrency scene across Asia-Pacific is fairly innovative, though Korea has notably adopted at a much slow pace than surrounding countries. To bring more opportunity to the institutional investors of South Korea, DXM and Ledger are combining forces to provide a custodial solution that is meant specifically for this demographic.

  • The new product from DXM and Ledger will be called Upbit Safe, using the tech of the Ledger Vault.
  • Korea may be behind in their own adoption of cryptocurrency, but multiple regulations have been proposed to guide consumers and platforms.

DXM, founded in January this year, is the subsidiary of Dunamu, offering cryptocurrency financial services out of South Korea. Dunamu is the majority shareholder of Upbit, a major cryptocurrency exchange in the same country.

Now, recent reports from The Block indicate that the crypto services firm is partnering up with Ledger, aiming to provide institutional investors with a new custody service. Ledger is based in Paris, France, offering cryptocurrency security services.

The new custody service is being called Upbit Safe, and it will use the hardware security technology of the Ledger Vault to improve trading efficiency and provide greater security for the institutional clients under DXM.

The hardware security module (HSM) solutions make it possible to change the governance rules, based on what they are running, according to Glenn Woo, the head of APAC at Ledger. Woo explained that Ledger Vault, while not as popular as the Ledger Nano X, works more effectively in use cases with institutional investors.

The first step of the DXM plan is to seek out customers that are already involved in either Upbit or in other cryptocurrencies that Dunamu has gotten involved in, according to Eric Yoo. Yoo, the Chief Strategy Officer at DXM, spoke with The Block about the recent $84-million investment planned for the next three years in the blockchain industry. At this point, they’ve dedicated $46 million amongst 26 blockchain companies.

Yoo stated that the assets that are already owned by Dunamu will ultimately help the Upbit Safe project become successful. He pointed out that DXM has “an advantage” over other companies in the space, both due to the fact that they are a subsidiary of South Korea’s largest exchange and that they have many assets that they can offer custody for.

“The combination of the Upbit brand, Ledger Vault’s security technology, and DXM’s own technology will give DXM an edge in the Korean market.”

The Asian Pacific operations for Ledger were only set up in Hong Kong about a year ago, aiming to expand the services to more countries in the area. By partnering with DXM, Ledger is also gaining an exposure for its technology amongst clients in Korea.

After all, the company is “still pretty young,” said Woo, and it is looking to get involved with multiple markets and partners that are interested in what Ledger Vault offers. He added:

“DXM has a reputation of being very secure… With the track record they have in Korea, they can definitely help us scale.”

Though many Asian countries have already seen the crypto industry gain traction, Korea is still early in their own adoption. With the lack of regulation and the uncertainty over laws that rule institutional finance, the sector is rather dormant, according to Woo. Regulatory authorities have notably refrained from providing comprehensive guidance that would otherwise make cryptocurrency easier and more appealing to get involved in, according to Global Legal Insights.

The Financial Supervisory Service (FSS) announced two years ago that they would not consider cryptocurrencies to be financial investment instruments, fiat currencies, or even electronic currencies. However, there wasn’t any clarity on exactly how it should be classified instead, which makes determining the regulations and restrictions that govern it nearly impossible.

Korea could easily take the same approach as countries like Indonesia, which has been fairly detailed in the regulations established for cryptocurrency by their financial body. Lacking certainty and regulations that can clearly show the way to handle this asset leaves potential customers in the dark, making it risky to get involved at all. As Yoo puts it, as well as many analysts and proponents have before him, “It’s quite a Wild Wild West out there.”

There have been a few cryptocurrency bills proposed by the National Assembly in Korea, taking on the requirements for licensing, cybersecurity, consumer protection, and more, according to the Global Legal Insights report.

Yoo remains confident that the first half of 2020 will see some of these regulatory measures work out, and the partnership with DXM puts Ledger in an excellent position to welcome new institutional investors.

Yoo stated, “We are one of the few companies in Korea to actually hope for regulations to form out. Once regulations become clearer, it’d be easier for us to engage with institutional money and not take the risks from uncertainties.”

Woo is also confident that both Ledger and new partner DXM are ready to integrate these regulations, adding that Ledger stands to benefit from the prior experience that Dunamu has in traditional finance. He said:

“With Dunamu and DXM, we do not see regulation as a problem at all. I’ve worked with them for almost a year now. They have people such as Eric Yoo who are coming from traditional finance. They understand how the traditional market works and wants to apply it to the new crypto world.”

There have already been many cryptocurrency companies that are taking too many risks with their business.

However, Woo points out that the staff at Dunamu “have a very good understanding” of the regulations that already exist, leaving him “very confident that they’ll always do the right thing.”