VersaBank, a Canadian digital chartered bank is making its final preparations to launch a cryptocurrency safe-deposit box that will be the first of its kind. When it comes to the issue of cryptocurrency education and adoption, banks have generally been hesitant. This is due to the uncertainty in the industry caused by a lack of regulation and the amount of theft and fraud that has occurred since the industry emerged. This stance taken by banks is an understandable one since they hold money as well as valuable assets for customers and cannot afford to be compromised.
VersaBank however, is breaking the status quo and venturing into the industry with full force as a solutions provider for a large problem that continues to derail investors. In an industry where security and privacy are viewed as valuable factors, the Canadian bank’s plans for a digital safe deposit box could not have come at a better time.
Recently, there have been issues of stolen assets in the cryptocurrency industry. One example is the theft of over $500 million worth of digital assets from Coincheck Inc, a Japanese cryptocurrency exchange. Another example is the hack of Bithumb, a South Korean exchange in which $30 million dollars was stolen. Coinrail was also hacked and $40 million in cryptocurrency assets was stolen as well.
The recent exchange hacks have put fear, uncertainty and doubt (FUD) in the minds of investors. Although the hacks did not affect cold wallets (not situated on an exchange), the ripple effect has made it seem like no wallets are really safe. Investors have a pressing need to securely store their assets without the fear of other people learning the full details of those assets and stealing them. Just like traditional bank safe deposit boxes, VersaBank’s technology will ensure that users can simply lock away their cryptocurrency assets without the general risks associated with the current wallets.
Who is VersaBank?
VersaBank is a Canadian digital Schedule I chartered bank which operates on an electronic branchless model. Although this model has become a norm, VersaBank was the first bank in Canada to adopt it in the early 1990s, way before giants like Amazon and Google ever existed.
The Canadian banking giant which began as a Saskatchewan-based trust in 1979, made the swift and rewarding move to electronic banking in 1993, when the internet newly emerged. All the bank’s fund sourcing and income gathering operations in the form of loans and lease receivables are carried out electronically. This adoption was four years prior to the introduction of telephone banking in Canada by the ING Groep NV. The bank has maintained that model till date, under the guidance of its experienced president and CEO, David Taylor.
Since it was founded, VersaBank has progressed and adapted to the changes that the internet has experienced. In fact, the bank has made so much progress that it is currently the tenth largest bank in Canada, with a total asset valuation of C$1.73 billion ($1.33 billion) and a market value of C$158 million ($126 million).
VersaBank Common Shares (VB) as well as its Series 1 Preferred Shares (VB.PR.A) and Series 3 Preferred Shares (VB.PR.B) are listed and traded on the Toronto Stock Exchange. The bank currently employs about 80 people and has outperformed other big banks in Canada over the years.
Company shares have risen in value by 24% in 2018 while the eight-company S&P/TSX Commercial Banks Index have seen a 2.9% decline so far. This progression is consistent with that of 2017 in which VersaBank shares saw a 19% value increase, and the eight-company banks index rose by 11%.
VersaBank has an array of services outside of keeping money, which include making residential development and commercial mortgages obtained from its lending partners and providing behind-the-scenes funding for small and medium businesses.
The digital banking giant has always been a leader in financial technology and innovation so its foray into cryptocurrency is not odd. The company has done its part to change the way digital lending and deposit is done and will now attempt to disrupt the way cryptocurrency is traditionally held.
Banks are the best option available for keeping valuable assets safe and VersaBank is ensuring that the cryptocurrency industry is not left out of that safety. Despite the bank being the first to launch this type of blockchain technology, it is not the only corporation that has come up with the idea. Xapo inc and the Shinhan bank of South Korea have also expressed interest in starting their own cryptocurrency safe deposit boxes.
Safety Deposit Boxes for Cryptocurrencies
VersaVault, the cryptocurrency safety deposit box service created by VersaBank has one major way in which it differs from traditional bank safety deposit boxes: the bank can’t access customer’s assets once they are locked in the vault. VersaBank will only provide storage but users will have maximum privacy.
According to an announcement made by VersaBank in June, the initial phase of VersaVault has gone into Beta testing and will soon be fully released to the public. Canada is quickly becoming a hub for cryptocurrency startups and investors alike. This move by VersaBank is a good one for the ecosystem and may serve as a source of encouragement for other banks to create blockchain-based solutions for their customer base.
Gurpreet Sahota, an expert in cybersecurity and former expert from BlackBerry Ltd was recruited by VersaBank to lead the software engineering team in the design and creation of VersaVault. The vault itself will store assets and currency on various servers around the world. The company has taken advantage of its past relationship with some important institutions in the cryptocurrency industry. These include exchanges and funds that will guide them on the specific criteria that VersaVault must meet, to become a widely accepted form of digital asset storage.
VersaVault is combining the use of the typically strong security controls that banks make use of with blockchain technology to ensure that customers’ assets are well protected against theft, fraud or any event that exposes the contents of their safe deposit boxes. The vault implements cryptocurrency security measures as well, such as multi-signing, co-signing and a host of other authentication factors.
The pilot version of VersaBank’s new technology is currently being tested with the help of a single exchange and a cryptocurrency fund that are trying to improve the asset protection measures they already have in place.
VersaBank has been on the forefront of innovation in the Canadian banking sector for a long time. Their launch of the first cryptocurrency safe deposit box is a huge move towards mainstream adoption of blockchain technology. The recent hacks and issues with theft in the industry may be assuaged by the presence of more secure asset storage infrastructure. For now, the software is still being tested but the bank claims that they will have no access to assets stored in VersaVault.
Globally, banks and insurance companies are generally skeptical about dealing with cryptocurrency. However, VersaBank’s new technology is a significant alteration to what is considered the norm and may influence the banking industry to be more favourable when dealing with digital assets. While it is still too early to say how VersaVault will perform, the idea behind it is exciting and presents a lot of opportunities for both the banking and cryptocurrency worlds.