Canadian bank building vault for crytpocurrencies
VersaBank Inc, a tiny Canadian lender led by a techsavvy CEO with a penchant for planes and classic motorcycles, is building a virtual safety deposit box for cryptocurrencies and other digital assets.
The firm is taking the lead in a global banking industry that's been reluctant to venture into most things crypto. The London, Ontario-based bank plans to have its digital vault ready by June and offer the service to global customers.
"We're using what banks are all about -- safety and security -- only what we're doing now is saying that physical box in the basement is getting obsolete," David Taylor, chief executive officer of Canada's smallest bank by assets, said in interview at Bloomberg's Toronto office. "Most people's really valuable assets are contained in some sort of digital format, whether it be a deed or a contract or a cryptocurrency."
The move underscores a paradox of Canada's financial system, which is dominated by six large lenders. While its banks are regularly regarded as among the world's soundest, it's also home to a boisterous junior stock market where new trends from blockchain to marijuana can quickly captivate investors.
VersaBank hired cybersecurity expert Gurpreet Sahota from BlackBerry Ltd. -- the former smartphone maker long viewed as a world leader in security and encryption -- to lead software engineers in designing its "VersaVault." It'll securely store digital assets on computer servers around the world. Like a safety deposit box, the bank won't know what's inside. What's different, though, is VersaBank can't access the contents.
"Our differentiator in this market is to be secure and super private," said Taylor, 65, said. "The bank wouldn't have any kind of back door to open up the vault, we're just providing the facility that folks could put their digital keys in."
Numerous high-profile heists including last month's theft of more than $500 million from Japanese cryptocurrency exchange Coincheck Inc. illustrate the need for security. Hackers typically steal money from crypto exchanges by gaining access to their Internetconnected wallet that stores customer funds.
Large funds are showing interest in storing their assets in VersaVault since the company announced the plan last month, Taylor said. Pricing hasn't been set, though it'll be expensive, he said.
VersaBank is building its vault as Bitcoin plunged below $7,000 on Monday for the first time since November, pulling down other digital tokens, as several U.S. banks said they're halting cryptocurrency purchases on credit cards, with some citing risk aversion and a desire to protect customers.
VersaBank is an early mover among traditional banks. South Korea's Shinhan Bank said in November it planned to start a bitcoin vault by mid year. Outside banking, Palo Alto, California-based Xapo Inc. has offered clients secure storage for Bitcoin for about four years, while Goldmoney Inc., a Torontobased firm that lets clients buy, sell and store precious metals in vaults in seven countries, started offering Bitcoin storage in September.