From Trials to First-Time Use of Blockchain/DLT, Crypto & DeFi
Nearly all corporations today are exploring and use cases for blockchain and decentralization ledger technologies, looking to integrate cryptocurrencies and/or tokens, or use smart contracts to remove middlemen.
Majority of central and major banks are either in the works to develop their own CBDC or crypto exchange/crypto custody respectively, or are working with consortia to fix trade finance with crypto-specific standards like ISO 20022. Many forward-thinking CFOs and treasurers are also seriously rethinking treasury functions within existing legacy systems and the ways in which they might transform their enterprise roles – from the custodians of historical cash activities to the fiduciaries of more strategic and expansive ownership rights over the full suite of enterprise liquidity and finance.
For most other financial enterprises, blockchain networks and related technologies present new opportunities to incorporate cross-border positions and increase their exposure to various crypto assets, equities and rights, amongst other things.
In support of these mandates, CryptoSec works with enterprise decision-makers to achieve unimpeachable standards of compliance and security before exploring, trialling and integrating blockchain networks and related technologies with their existing legacy systems, practices and governing rules.
In most cases, the full security reference architecture, as well as scans for pre-existing technological vulnerabilities and comprehensive corporate risk assessments, must be managed prior to adopting crypto technologies. We work with clients to assess and identify and manage pre-existing vulnerabilities and to satisfy their corporate risk assessments, with comprehensive (infrastructure and code) audits and penetration testing, and the implementation of appropriate pre-emptive security measures (where applicable), before enterprises gain formal clearances to access, use and develop new crypto technologies.
While the advancements in blockchain technologies are sweeping, the code is still written by humans, and prone to human errors, vulnerable to malicious attacks. The integrity of such networks cannot be overlooked. If the technology is set to permeate every major ﬁnancial system worldwide, the impacts of a glitch or hack could be catastrophic.
Enterprise decision-makers cannot afford to dive into the deep end of crypto practice in the same way retail investors can. Multi-layered risks and threats need to be identified and managed, with careful planning across business units and systems.
Depending on enterprise circumstances, CryptoSec undertakes comprehensive advisory work, penetration testing, auditing, and reporting to grant clients the Enterprise-Level Security Clearances and approvals they need to enter DeFi and adopt blockchain technologies with confidence and certainty.
Leading financial enterprises are exploring how to use distributed ledger technologies and smart contracts to overcome the sluggish inefficiencies, frequent manual errors and lateness within the current state of settlements, claims processing, cross-border payments and even the sale of stocks and shares. Indeed, Santander Bank has estimated that blockchain technology alone has the potential to save banks $20bn in the solution of settlement inefficiencies.
The adoption of new ledger technologies stand to significantly reduce or eliminate the manual effort required to perform reconciliation. Not to mention, distributed ledgers have the potential to lead to near-instantaneous settlement, whilst significantly reducing/eliminating the manual efforts required to resolve disputes and fraudulent charges.
While such advancements are sure to revolutionise financial systems, the transition from the old to the new will require hypervigilant assessments and planning to ensure enterprises can securely adopt and integrate new technologies into their existing systems, practices and rules. We can perform detailed audits of your smart contract and source code, design, and interaction with third party components to identify implementation vulnerabilities and flaws in business logic assumptions. We can help you deploy your smart contracts with confidence, backed by expert vulnerability analysis, and world-leading software security expertise. CryptoSec works with enterprises to complete those audits and assessments and to gain the necessary security clearances and approvals to commence enterprise blockchain interoperations for financial settlements.
Enterprise compliance, such as AML/CTF transaction reporting, can be improved with the help of blockchain technology. Meanwhile, enterprises are transforming internal compliance and record keeping systems including their Enterprises Application Software, CRM, SCM, PLM, ERP, with enterprise blockchains and cryptography, to improve asset provenance, traceability and efficiency, significantly reducing their overall compliance, privacy and record-keeping expenditure.
Disintermediating third parties that support transaction verification/validation and accelerating settlements, management of digital identity, streamlining reporting requirements, such as manual KYC (or KYT for “Know Your Transaction”), AML/CFT supervision, and creating transparency, facilitating differentiated customers, regulatory reporting loss reporting, recording and provisioning consistent with regulations such as Basel III/IV, Solvency II and IFRS 9.
CryptoSec reviews the design and implementation security for interoperable systems for enterprise clients to identify potential attacks and vulnerabilities, forecast their impact and propose remediations, to ensure enterprise clients can pass CryptoSec’s enterprise-level security clearances. We also work with enterprise clients to design the architecture of new blockchain and derivative technologies – and to propose complimentary improvements, protocols, policies and procedures – to standards that pass CryptoSec security clearances.
Aside from accessing and trading approved crypto ETFs, enterprise investors and decision-makers are now exploring options to leverage new digital asset classes, equities and rights available through DeFi and crypto technologies.
Minting and storing crypto assets (cryptocurrencies, NFTs), accessing new asset registries and products, reducing locked-in capital and providing transparency into sourcing liquidity for assets. Institutions are already accepting Bitcoin for mortgage repayments, have launched creative crypto financing products, or are accepting cryptocurrencies for lease repayments and fractional-property investments.
CryptoSec works with investors and decision-makers to explore, trial and implement appropriate options to leverage new financial products in crypto and DeFi, often, in concert with their traditional finance offerings. We will audit and assess network protocols before clients commence operations to check for security, risks and governance vis-a-vis clients’ pre-existing corporate rules, policies and procedures.
We also work with enterprise clients to explore and implement best practices to digitally catalogue, claim and secure their offline real property, intellectual property and proprietary rights, with cryptography, smart contracts and tokenization, designed to meet their particular enterprise needs.
The European Central Bank recently announced it was progressing its ‘digital euro’ project into a more detailed investigation phase. And more than four-fifths of the world’s central banks are similarly engaged in pilots or other central bank digital currency (CBDC) activities.
Concurrently, multiple private, stabilized cryptocurrencies (stablecoins) have emerged outside of state-sponsored channels, as part of efforts designed to enhance liquidity and simplify settlement across the growing crypto ecosystem.
CryptoSec works with central banks and other enterprise leaders in the design, development and approval of CBDCs and Stablecoins, to ensure they meet with CryptoSec’s Enterprise-Grade Security Clearances.
We work with DAO founders and treasuries to complete comprehensive audits establishing Proof of Reserve (PoR), the architectural design (secure block design, consensus design, transactional design), and security reference architecture (network layer, consensus layer, replicated state machine layer, application layer), identifying an accurate establishment security and risk profile, suggesting remediations, and delivering professional audit reports suitable for open publication that establish trust and credibility. We also provide strategic advice to DAO founders and treasuries on the creation and design of new Public Key Infrastructure (PKI), that is, the set of roles, policies, and procedures needed to create, manage, distribute, use, store, and revoke digital certificates and manage public-key encryption.