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American Banker: BNP Paribas Out Front on Digital Asset Storage

Tourmaline

Alexandra Hamer

Alexandra Hamer

The Office of the Comptroller of the Currency this summer gave national banks the green light to store digital assets, but a large foreign bank already had a head start on its U.S. rivals. BNP Paribas launched a proof of concept with the technology company Curv in July, right around the time of the OCC’s move, to test technology for storing and transferring digital assets in response to demand from customers.

“We started to receive more queries from our clients about what can be done and what cannot be done with digital assets,” said Bruno Campenon, global head of nancial intermediaries and corporates at BNP Paribas. “This is a topic that has become top of mind.”

The work the Paris-based bank is doing to better understand how to offer services around digital assets is sure to be mirrored by U.S. banks just starting to enter the eld after the OCC gave federally chartered banks permission to act as a safe keeper of digital assets such as bitcoin for their customers.

Some hedge fund clients, for instance, are being asked by their customers about their readiness to handle digital assets. Some might want to issue digital bonds to raise cash, for instance. Others are considering including digital assets in funds, to drive higher yields.

“Hence they revert to us as a custodian to inquire about what is feasible, what is possible, what we trust is safe and not safe,” Campenon said.

“There are a lot of people out there who own a lot of money stored or trapped in crypto assets that can never be sold without attracting attention,” Monahan said. “They hold them, and they wonder where to hold them and what to do with them.”

Then there are hedge funds that realize a lot of money could be made trading digital assets and in fees from having digital assets under management, and arbitrage traders who trade bitcoins against bitcoin futures and collect the spreads.

All of this activity creates demand for digital asset custody and transfer, Monahan said.

In the proof of concept, which was completed in early October, BNP Paribas Securities Services and New York-based Curv transferred a security token between two market participants on the bitcoin blockchain.

Until about three years ago, according to Itay Malinger, founder and CEO of Curv, companies offering storage of digital assets had World War II-style bunkers with security guards and cameras, where the assets were held fully ofine but could take 24 hours or more to access.

“The entire world today is moving to the cloud, fully online,” Malinger said. “This is the experience that customers want to have when interacting with digital assets.” Curv built a software-only cloud service that’s fully online, he said. It uses multiparty computation, a form of cryptography in which parties jointly compute a function, to secure the private keys to digital assets.

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