BITCOIN hacking has forced cryptocurrency investors to investigate new ways to protect the digital tokens following a series of hacks and cyber attacks.
Last month, hackers stole about $530 million from the Tokyo-based exchange Coincheck Inc.
The heist exposed flaws in Japan’s system overseeing cryptocurrency trading and sparked a row over how to regulate bitcoin and other digital tokens.
In Asia, South Korea is embracing strong oversight of cryptocurrency trading, at one point saying it might shut down local exchanges. China, concerned about financial stability, last year ordered some exchanges to close. India this month vowed to stamp out use of cryptocurrencies altogether.
Bitcoin investors keep the digital money in online wallets – essentially a digital folder stored on a server. But fears over hacks have provided a new solution to storing the cryptocurrency.
A gold investment and trading firm in Dubai called Regal RA DMCC has unveiled the world’s first “deep cold storage” solution to store cryptocurrencies. This will allow investors to trade and store their digital currencies in a vault located in Dubai’s Almas Tower.
The vault at DMCC is seen as one of the most secure precious metal facilities in the world and can store all crypto investments in a physical form. This means it will not be connected to a network, and will be alongside the company’s current stock of physical gold.
They have also become the first company in the Middle East to receive a license to trade cryptocurrencies.
Tyler Gallagher, chief executive of Regal Assets which owns Regal RA said: “We have developed what we believe is the number one most secure way of investing in bitcoin, ethereum and other crypto-commodities.”
Mr Gallagher said investors “reluctant to store large amounts of coins in online wallets and exchanges due to the high risk of hacking, identity theft, malware and other issues that can literally obliterate an investment.”
The regulator of Abu Dhabi’s international financial centre said it could create rules for exchanges handling virtual currencies, in a sign that authorities in the United Arab Emirates may allow trade in cryptocurrencies such as bitcoin to develop.
Last September, the Dubai Financial Services Authority, which regulates the Dubai International Financial Centre, warned investors to be cautious about dealing in them because they were not regulated.
In October, the UAE central bank said it did not recognise bitcoin as an official currency, citing the risk of it being used in money laundering and terrorist financing, and last week the UAE’s securities regulator warned the public about the risks of using digital tokens.
Przemek Skwirczynski, head of research at ICO rocket said a vault could provide a solution to bitcoin hacking.
He said: “The idea sounds good in principle and aims to address the recently well publicised problem of crypto being hacked or outright stolen.
“The key being generated and then held offline in a hardware wallet seems like a possible risk mitigation, however the company’s website also claims Dubai to be a crypto-friendly jurisdiction, which at the moment is rather superficial, given the lack of regulation and at times mixed messages from their regulator.
“So as much as this is a pioneering idea, I would also be interested to hear why a similar concept couldn’t be replicated in renowned vaults in other places around the world.”