👇 thread on crypto custody & MPC.
2 big deals were announced this week in the custody space & both Israeli
1. Unbound was acquired by Coinbase
2. Fireblocks raised another round @ a $8b valuation with backing fork Sequoia, Stripe & Sp k
theinformation.com/articles/sequo…
2 big deals were announced this week in the custody space & both Israeli
1. Unbound was acquired by Coinbase
2. Fireblocks raised another round @ a $8b valuation with backing fork Sequoia, Stripe & Sp k
theinformation.com/articles/sequo…
This comes after PayPal acquired Curve & Celsius bought GK8 (also Isralei), the trend seems to cement MPC as the emerging standard for institutional crypto custody across chains & DeFi products, slowly replacing HSM solutions tradfi has used for a while now
But the acquisition wave is part of a more interesting intermediation than wave happening across crypto. These custody companies started out as tech solutions licensed out to institutions (exchanges, MM, Fi, funds) to use for their capital, allowing them to built rule based tx
Rule based transactions of the sort tradfi uses allow clients to customize their own policies for crypto trading remotely, instead of using more manual execution contingencies or having to deal with cumbersome key management across the organization
https://twitter.com/mayazi/status/1331588909327917056
However the real impact is who is buying up custody tech? It’s exchanges & players who are looking to build up a full stack Prime Brokerage service, thus positioning themselves as the crypto intermediary for institutionals.
De facto that might mean fewer solution on the market
De facto that might mean fewer solution on the market
The promise of MPC lies in the double whammy promise where custody can provide compliance in itself, by creating reporting & rules that will satisfy regulators.
The lack of a complete solution led a lot of FI capital to seek crypto instruments in tradfi (ETP, funds)
The lack of a complete solution led a lot of FI capital to seek crypto instruments in tradfi (ETP, funds)
https://twitter.com/mayazi/status/1331588308649054208
If clients will be able to get that full key solution only through a Prime Broker intermediary, we’ll see a lot more capital move through the big exchanges.
Unbound specifically is an interesting case. Led by Yehuda Lindell, who is behind a lot of the academic research in key management & mpc specifically, it’s been trying to go down the compliance use case for a while. But the main clients ended up being exchanges
The sum of the Coinbase acquisition (around $200 mil on $40 mil raised in equity) implies that the big returns in custody tech might be drawing to an end & from here on out custody valuations will rely solely on AUM
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