Asset & Wealth Management
Fosun-backed Aegis wins digital-assets trust license
The H.K. trust license means it is now live providing custody to digital assets of major Asian corporations.
Aegis Custody Company has received a trust-company license for its digital-asset custody business in Hong Kong, says its founder and CEO, Serra Angel Wei.
The company expects to receive a trust license in the coming months from South Dakota, which has also become a hub for digital trust businesses in the U.S. (Michael McCarty, who has a career in the South Dakota trust services industry, is president of Aegis’s trust business there.)
The Hong Kong license means it is now live and responsible for the digital assets of two clients. One is the company’s main backer, Shanghai-based Fosun International, which supported the company’s $4 million Series A funding round. The second is Foxconn, the Taiwan-based manufacturer of Apple’s iPhones.
Asian corporates in blockchain
Fosun International has always been an aggressive acquirer and investor both at home and overseas. In 2014 it was among the world’s biggest dealmakers, although the Chinese stock market crash of 2015 put an end to that buying spree.
However, in 2017 the company acquired Shanghai Distributed Technologies, the driver of a domestic blockchain project, OnChain, which developed the NEO protocol.
This could become a $24 trillion marketSerra Wei, Aegis
Since then, Fosun has been an active investor in initial coin offerings and other digital assets. In addition to its insurance arm, Fosun is a huge player in China’s private healthcare market, from pharmaceuticals to medical devices, and it is gradually transferring records and documents onto its blockchain. It is also interested in using tokenization to securitize assets in some of its overseas properties, such as the Wolverhampton Wanderers football club.
Foxconn also entered blockchain in 2017, when it launched a company called ChainedFinance as a supply-chain finance platform for all the suppliers and distributors in the Foxconn universe. ChainedFinance works with Dianrong, a P2P lender, to attract investors to its pool of invoices. Those invoices are tokenized on the blockchain, but to transform these into a secondary market requires those tokens be held in custody.
From Goldman to Aegis
Wei, formerly a Goldman Sachs technology analyst in Taipei, joined the board of Foxconn’s blockchain group, before striking out on her own. She briefly ran an investment banking advisory group out of San Francisco, a venture that failed but did lead her to invest in Passport Capital, a crypto trading outfit trying to attract institutional investors.
The experience opened her eyes to the huge need for custody infrastructure, and the potential size of the market as more and more things become tokenized. “This could become a $24 trillion market,” she said.
Aegis is based in San Francisco but its technology was built by a Taiwan-based team. Its platform comes with a bespoke hardware device, in which the private key is embedded. If this is lost, or if there’s a disaster (an earthquake takes out the internet, or whatever) then clients can still access funds by using “mnemonic seeds” to generate a long, 96-word long string that can access an account.
There’s also reams of governance documentation that stipulate multiple steps a client’s organization must follow to access the account, similar to a bank’s internal approval processes for accessing transaction data.
Now, armed with its first trust license, Aegis is out to win more clients. Daniel Heyler, its Hong Kong representative (and a former tech analyst at Bank of America Merrill Lynch, among other jobs), says Aegis also hopes to become the first to win a broker-dealer license from a key regulator, such as the U.S. SEC or Switzerland’s FINRA.
So far they have held back, in part because they are wary of awarding a license in an untested field, but regulators are putting a lot of time into understanding digital assets, he says.
But Wei says the vast potential in securitization, supply chain collateral, and other aspects of tokenization will create trillions of new assets, all of which will require infrastructure providers.
Aegis is likely to follow up with a Series B fundraising. It looks to raise $25 million for ongoing tech builds, marketing, and pledging capital to trusts (that is, insurance reserves).