ING sells digital asset solution Pyctor to GMEX – Ledger Insights

Today, ING announced that they have spun out their post-trade solution for digital assets, Pyctor, which provides decentralized custody and settlement for institutions. In a multi-million dollar agreement, the technology has been acquired by GMEX, a provider of institutional trading technology and the technology partner for TP ICAP’s digital asset offerings.

“After spinning out Stemly last year from ING Labs Singapore, Pyctor has been another success story for innovation at ING Neo,” said Olivier Guillaumond, Global Head of Innovation Labs & Fintechs, ING.

Pyctor’s solution makes it possible to fragment private keys for digital assets and spread them among blockchain nodes hosted by regulated institutions, using multiparty computation (MPC). The offer supports both public and permitted blockchains.

Previously, several institutions participated in UK regulatory sandbox trials of Pyctor, including ABN AMRO, BNP Paribas Securities Services (BNPPSS), Citibank, Invesco, Société Générale – Forge, State Street, UBS and others. Three of the participants are top five global custodians. Some have now gone in other directions for custody. For example, Citi and SocGen Forge recently announced that they use Metaco, and State Street is working with Copper.

Why GMEX bought Pyctor

Hirander Misra, CEO of GMEX, acknowledged that they are buying a proven minimum viability product instead of a live network. For GMEX, one of the advantages is the synergies with existing solutions – especially GMEX MultiHub – and its own customer base. It is also possible to collaborate with some of Pyctor’s pilot participants, but it remains to be seen. In addition, there will be an ongoing collaboration with ING’s Digital Assets team.

“There is a need for a secure MPC-based network where institutions can make an effective settlement between them,” Misra said. Another appeal from Pyctor is that this is not just any solution. It is one that was developed from the start with the security standards that regulated institutions expect.

And as cryptocurrencies come into force, some will struggle with compliance. One of Pyctor’s products is Pyxis, which provides a solution for compliance with the FATF Travel rule for AML, which enables regulated DeFi. Based on TradFi, Misra believes that it is far easier to go from regulated asset classes to crypto than vice versa.

He also sees a technology provider like GMEX as a good home for Pyctor. “An institution that operates a network on behalf of others does not necessarily scale to the same degree as when it is neutral,” Misra observed. “When it’s neutral, everyone sees it as theirs.”

About GMEX

GMEX is ten years old and started in traditional finance, stock exchange development, matching engines, clearing, settlement and custody solutions. It became involved in digital assets in 2017 and has several offerings, including the MultiHub solution, which supports both traditional and digital assets. It is a network of network services, which eliminates the need to integrate with multiple arenas. The support for several assets is in accordance with the company’s assignment to build a bridge between traditional and digital assets.

TP ICAP, the world’s largest interdealer broker, is GMEX’s high-profile digital asset client. GMEX helps TP ICAP develop a spot crypto-trading platform that will be launched later this year. So far, it has integrated with Fidelity Digital Assets, Flow Traders and Hudson River Trading. And for custody, it is linked to Standard Chartered Zodia, Nomura’s joint venture Komainu and Galaxy Digital’s BitGo.

Last month, GMEX announced a major round of financing – $ 20 million in equity and $ 5 million in debt – led by Burkhan’s Tempus Network and will close soon.

Regulated institutions hold together

The Pyctor and TP ICAP examples show that larger regulated institutions prefer to relate to other regulated institutions operationally and to reduce various risks. Meanwhile, in the last month, several central banks have stated that the cryptocurrency crash has not affected traditional finance due to the limited context. This is something that is starting to change at the asset level. But until crypto companies become more extensively regulated, it seems that larger institutions prefer to stick to a separate playground.