ING tests cryptocurrency custody solution

The Dutch bank ING has for the first time disclosed details of the preliminary trials of a digital asset custody solution developed under the Pyctor project, according to CoinDesk.

The project, aimed at creating the infrastructure for storing and carrying out settlement and clearing operations with crypto assets, also involves banks and investment firms such as ABN AMRO, BNP Paribas Securities Services, Citibank, Invesco, Societe Generale, State Street, UBS and others.

Pyctor is included in the Financial Conduct Authority’s (FCA) regulatory sandbox.

According to ING’s head of the blockchain division, Hervé François, Pyctor includes several levels of security, such as multi-party computation (MPC) and hardware security modules, as well as decentralisation.

“The Pyctor network for financial institutions enhances the security of assets held in custody and eliminates single points of failure,” he said.

Work on the project began no later than December of last year, Reuters reported, citing informed sources.

Before joining the FCA’s sandbox in July 2020, Pyctor ran a pilot involving DLA Piper, R3, Tata Consultancy Services and Securosys. Two asset managers participated. Their custodians handed to the Ethereum test network a token representing a digital bond issued by a Societe Generale unit named Forge.

According to François, the transaction confirmed the reliability of Pyctor’s decentralized operating model for secure custody and transfer of assets.

Another pilot under the FCA sandbox focused on developing the token issuance and governance model. In this case, François said, the smart contract involved in issuing tokens on the Ethereum network was governed by Pyctor’s private network.

“The transaction took place on the Ethereum blockchain, confirming the viability of using public networks,” François stressed.

In addition to developing a custody solution for cryptocurrencies, ING is also playing an active role in the fight against money laundering in the industry. The financial institution has become one of the creators of the Travel Rule protocol, which helps virtual asset service providers comply with AML and CFT procedures developed by the Financial Action Task Force (FATF).

Earlier, SC Ventures, the venture arm of the British banking corporation Standard Chartered, and the financial services provider Northern Trust announced the launch of an institutional-grade cryptocurrency custody service.

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