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As the cryptocurrency market experienced massive volatility in 2022, many cryptocurrency investors learned that storing their cryptocurrency on an exchange was not like holding their money in a deposit account with a bank. Investors worldwide were blindsided when FTX, Binance, Celsius, CoinFLEX, and Genesis (to name a few) barred their customers from withdrawing their assets. Investors were under the impression that they could access their deposits/holdings whenever they wanted to, and, as we now know, this was (and still is) not the case.
Investors not affected by withdrawal freezes, and with the benefit of hindsight, moved quickly to protect their cryptocurrency investments by taking them off-exchange, as reflected in a report by Blockdata indicating that the size of cryptocurrencies under third-party custody/storage had grown from USD 32 billion in 2019 to USD 223 billion in 2022.
This trend continued into the end of the year, as Cryptoslate reported that nearly 78% of Bitcoin’s total supply is held off-exchange. From a Jaltech perspective, our Digital Safety Deposit Box’s deposits have increased by over 50% over the past three months alone.
For information about Jaltech’s Off-exchange Cryptocurrency safety deposit box, click here.
The two most popular solutions adopted by investors taking the off-exchange route are personal cold storage, a technical process carrying a high degree of personal responsibility, and third-party custody providers, an option for investors looking for protection but not wanting to take on the risk of losing their cold wallet hard drive or the passwords to access their cryptocurrencies.
Given the potential anxiety cryptocurrency holders may have with moving their cryptocurrency off-exchange, we have answered below a number of the regularly asked questions that our new clients have been asking. In addition, we are offering new customers a 50% fee discount until 1 July.
Can my cryptocurrency holdings be removed off a local exchange?
Yes, Jaltech has assisted clients in moving their cryptocurrencies off all major exchanges in South Africa.
How long does it take to transfer cryptocurrency into Jaltech’s Digital Safety Deposit Box?
The transfer process takes less than 2/3 minutes, and you will be guided telephonically or virtually through the process.
Which cryptocurrencies does Jaltech’s solution support?
We support over 1 200 different cryptocurrencies and tokens across dozens of blockchains.
Can I lose my cryptocurrency during the transfer process?
The risk is extremely low, we suggest that clients transfer a very small amount first, and once we confirm that the cryptocurrency reflects on our side, the client can transfer the remaining balance in portions or in full.
How secure is Jaltech’s solution, and what technology does Jaltech use to store cryptocurrency assets?
Jaltech has partnered with Fireblocks, the world’s leading cryptocurrency storage provider. Fireblocks has processed over R50 trillion in transactions on its platform and has 1 300 institutional clients globally.
The Digital Safety Deposit Box combines multi-party computation (referred to as MPC) cryptography with hardware isolation in its multi-layer security technology, which eliminates a single point of failure and insulates digital assets from cyber-attacks, internal collusion, and human error.
What measures are in place which prevent Jaltech from running away with your cryptocurrency?
Our solution – which entails multiple layers of security and redundancy – protects your cryptocurrency from external attacks while simultaneously guarding against the possibility of theft originating internally.
Multi-party computation technology makes the transfer of assets by any single party impossible. Any transaction from Jaltech’s Digital Safety Deposit Box requires written instruction from our clients and authorisation from multiple parties at Jaltech and Fireblocks (operating independently). In the case of large transactions, a second independent third-party approval is required (this additional layer of protection can also be opted into for smaller transactions at a fee).
How do I prove that my cryptocurrency assets are with Jaltech?
All Jaltech clients receive a statement of their holdings when deposited and on request, and our wallets are audited annually. In addition, Jaltech has committed to annual audits of cryptocurrency holdings.
Are cryptocurrencies held in Jaltech’s custody solution insured?
There are no insurers in South Africa who offer cover for cryptocurrency assets. However, Jaltech does have insurance for operational fraud or mismanagement which protects our clients.
Are the cryptocurrencies held in ‘hot’ or ‘cold’ wallets?
Jaltech does not use hot or internet-connected wallets at risk of cyberattacks, sophisticated social engineering, and phishing scams. Instead, our custody solution holds cryptocurrencies within Fireblocks’ infrastructure – completely off-exchange and secure.
What is the process to get my cryptocurrency off-exchange and into Jaltech’s custody solution?
Once our brief online application form is complete, a representative of Jaltech will contact the client to guide the client through the deposit process.
What happens to my cryptocurrency if Jaltech ceases to do business?
The cryptocurrencies we custody on behalf of our clients do not form part of Jaltech’s balance sheet; we act as custodians. Therefore, any potential creditors have no claim against these assets, and we are contractually obligated to return the cryptocurrencies to our clients within five business days of receiving a withdrawal instruction.
If you are interested in moving your cryptocurrency assets off exchange and into Digital Safety Deposit Box, you can click here, complete the form, and a representative of Jaltech will contact you. All new clients will be entitled to a 50% fee discount up and until 1 July.
For information about Jaltech’s Off-exchange Cryptocurrency safety deposit box, click here.
Jonty Sacks & Chris McCormick – Jaltech Fund Managers
Jaltech offers private individuals, institutions, and corporates a seamless, cost-effective, and a safer alternative storage option to holding cryptocurrencies themselves or on a cryptocurrency exchange.
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