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The proliferation of digital assets has generated the need to ensure mitigation of risks and safety of everything, from cryptos to NFTs. The space, however, is not easy to understand and can be overwhelming for users. Propine, a licensed digital asset custodian headquartered in Singapore is engaged in transforming how digital assets are stored and traded by providing secure and scalable solutions for qualified institutional clients. In a chat with ETDigital, Tuhina Singh, Founder & CEO, Propine. Talks about what her company provides, the trends in the digital asset space, risks associated with blockchain and the role of regulators. Edited excerpts.
Economic Times (ET): When did Propine start and what was the idea behind it?
Tuhina Singh (TS): Founded in 2018, Propine has been involved in the blockchain space since 2015. Recognising the transformative potential of smart contracts and blockchain technology for enterprises across various sectors, we anticipated a future where these innovations would redefine business operations and value transfer.
As digital assets mature, institutional investors start moving markets, and financial firms tokenise previously illiquid asset classes such as corporate bonds, real estate, private equity, funds, art, natural resources, and derivatives – they would all need access to institutional infrastructure, particularly custody, to enable them.
Therefore, Propine was established with the vision to offer a regulated, institutional-grade digital asset custody service that ensures the safe, compliant, and efficient management of digital assets. The company caters to institutional investors who require high standards of security and regulatory compliance.
ET: What does the company provide today?
TS: Today, Propine offers a comprehensive suite of services, including:
ET: Who are your customers and how do they benefit from a service like yours?
TS: Propine's customers include institutional investors such as banks, asset managers, exchanges, blockchain protocols, fintech platforms, wealth managers and high-net-worth individuals.
To fully harness the potential of new technologies, both corporations and individuals must securely store and transfer their digital assets within a framework that is compliant with regulations and legally robust.
Existing solutions often require individuals and businesses to sacrifice either security or convenient accessibility. Several other concerns that crop up, include, but are not limited to:
As digital assets increasingly integrate into our daily lives and professional environments, it is imperative to establish infrastructure that ensures secure and compliant transactions. This framework should operate within a well-established legal structure that has proven its reliability over time. Among all industries, financial services face the greatest risk of disruption today, with every aspect of their operations—from deposits and lending to trading, clearing, settlement, remittances, payments, and asset management services—being challenged.
A regulated, institutionally robust digital asset custody service like Propine, underpins all these vertically integrated markets. Loss of control of an account’s private keys through cyber-attack or an operational mishap can result in irreversible asset loss. Our clients thus benefit from working with a partner that future proofs their business from all regulatory, operational and technical risks.
ET: The biggest issue for the sector has been around trust and security. How do you ensure that on the platform?
TS: Propine ensures trust and security through advanced technology and robust infrastructure. It utilises IBM HSM at the core which is FIPS 140-2 Level 4 certified, quantum-resistant key management, programmable non-tamper-able policy engines, protected memory enclaves and a dual-layer multi-signature system to protect against cyber-attacks, phishing attempts, manual, human errors and internal collusion.
Propine also conducts comprehensiveandregular security audits by reputable firms like PwC, NCC Group, and Deloitte. Propine has procured insurance from the best names in the industry and is fully licensed by MAS and ISO 27001 + SOC Type II certified.
ET: Cryptos have been a gray area with several regulators. How do you navigate the regulatory hurdles and ensure compliance with various laws?
TS: Propine has been very prescient about the growth of the digital asset ecosystem and the regulatory challenges that the market will eventually face. The company has actively collaborated with MAS and other global regulators to stay ahead of compliance requirements. In fact we started engaging with regulators as early as 2018 with an intention of setting up a licensed solution when pretty much rest of the industry was looking the other way, and vying to set up business outside of regulatory ambit to avoid scrutiny of their operations. Our active discussions led to Propine becoming the first and only company to enter a sandbox managed by MAS and we graduated from it with full license.
ET: When it comes to Bitcoin, we have seen several crashes. Do you think regulations could have prevented that? How do you ensure there is a balance between regulation and allowing innovations to happen?
TS: Creation of clear regulatory frameworks for new financial assets, such as digital assets, ensures that market participants understand the rules and their responsibilities, which fosters trust and participation. It is a clear sign of a maturing market.
Appropriate regulations have an important role to play to prevent extreme crashes and reduce volatility.
Regulations ensure there is a watchdog to monitor trading activities, to detect and prevent market manipulation, insider trading, and fraudulent activities. When irregularities are detected, these bodies have the authority to take enforcement actions, including fines, trading halts, and legal actions against violators. FTX and Three Arrows are high profile examples of such enforcement.
They protect investors by reducing information disparity between investors via enforcing material disclosure requirements on the companies. Additionally, regular and timely reporting increases transparency, allowing investors to make informed decisions, reducing speculation-driven volatility.
Suitable circuit breakers on trading venues, applied correctly, are proven methods to halt panic selling in a significant decline. Similarly, capital adequacy reserves help to cushion against significant losses, ensuring service providers remain solvent during market downturns.
Trading rules and short selling regulations can prevent excessive downward pressure on assets during periods of market stress. Margin requirements can prevent build of excessive leverage which can amplify market volatility.
Regulators often engage in educating investors about the risks and opportunities associated with new financial assets, ensuring that they make informed decisions. Regulations attract institutional investors by ensuring that the market operates fairly and transparently, bringing in significant liquidity and expertise which increases market depth, thereby reducing volatity. Finally, establishing standard practices and norms for new financial assets helps in creating a level playing field and reducing operational risks
However, it is equally, if not more important, to balance regulation with innovation. Here are some of the things steps and frameworks regulators as well as companies can take, to balance the risks, investor protection and innovation:
ET: Cryptos and Blockchain have been around for some time now. Blockchain, particularly, holds a lot of promise. However, we still see very limited adoption of the technology across sectors. What is stopping the tech from being more widely accepted?
TS: Several factors hinder wider adoption of blockchain technology:
ET: What significant trends are you observing in the digital asset industry in Asia?
TS: In Asia, Major financial institutions, including banks and asset managers, are increasingly participating in the digital asset space. This is driven by the potential for high returns and the growing acceptance of digital assets as a legitimate asset class.
Countries like Singapore and Japan are leading the way in establishing clear regulatory frameworks that provide legal clarity and foster investor confidence. This has spurred technological advancements and innovations in blockchain technology, such as improved scalability and interoperability.
DeFi platforms are also gaining significant traction in Asia, offering innovative financial services such as lending, borrowing, and yield farming without traditional intermediaries. This trend is particularly strong in countries with robust fintech ecosystems like Singapore and Hong Kong. Regulators are beginning to engage with DeFi projects to understand their impact and potential risks, aiming to balance innovation with consumer protection.
There is a growing interest in tokenizing real-world assets such as bonds, real estate, commodities, and art. This allows for fractional ownership, increased liquidity, and broader investor access.
Similarly, more businesses are accepting cryptocurrencies as a form of payment, driven by the increasing consumer demand for digital payment options. This trend is especially evident in tech-savvy markets like South Korea and Japan. Companies are developing integrated payment solutions that combine traditional and digital assets, providing seamless transaction experiences for users.
Companies are leveraging blockchain for supply chain management to enhance transparency, traceability, and efficiency. This is particularly prominent in sectors such as agriculture, pharmaceuticals, and electronics.
We also see early emergence of secure and tamper-proof digital identities on the blockchain to streamline KYC processes and reduce fraud. For example,Selfkey, is a blockchain-based identity platform used by financial institutions and government bodies in Asia.
ET: How do you foresee the growth trajectory of digital assets in the region in the coming years?
TS: The digital asset market in the Asia-Pacific (APAC) region is poised for significant growth in the coming years, driven by several key factors. Continued development of clear and supportive regulations. Growing involvement of institutional investors, asset managers and banks will provide stability and credibility.
Innovations in blockchain technology are addressing scalability issues, making it possible to handle larger volumes of transactions efficiently. Layer-2 solutions and improved consensus mechanisms are examples of such advancements.Development of interoperability solutions that allow different blockchain networks to communicate and operate together seamlessly is enhancing the utility and adoption of blockchain technology.
ET: What future trends in digital assets are you most excited about, and why?
TS: I am personally most excited about the disruption in value transfer space. The very concept of “value” which is today captured in monetary terms alone, will be expanded. This will allow unbundling and monetization of different types of values, creating new economic opportunities. It will have a ripple effect on how businesses and their customers interact. Add the progress in AR/VR to it and we will see entirely new business models emerge for immersive customer experiences.
Economic Times (ET): When did Propine start and what was the idea behind it?
Tuhina Singh (TS): Founded in 2018, Propine has been involved in the blockchain space since 2015. Recognising the transformative potential of smart contracts and blockchain technology for enterprises across various sectors, we anticipated a future where these innovations would redefine business operations and value transfer.
As digital assets mature, institutional investors start moving markets, and financial firms tokenise previously illiquid asset classes such as corporate bonds, real estate, private equity, funds, art, natural resources, and derivatives – they would all need access to institutional infrastructure, particularly custody, to enable them.
Therefore, Propine was established with the vision to offer a regulated, institutional-grade digital asset custody service that ensures the safe, compliant, and efficient management of digital assets. The company caters to institutional investors who require high standards of security and regulatory compliance.
ET: What does the company provide today?
TS: Today, Propine offers a comprehensive suite of services, including:
- Digital Asset Custody: Secure storage and protection of digital assets, including cryptocurrencies, stablecoins, NFTs, and fiat.
- Asset Servicing: Management of corporate actions, income distribution, and investor reporting.
- Trade Settlement Facilitation: Efficient transaction processing and settlement.
- Tokenisation Solutions: Through the DASH platform, Propine offers end-to-end asset lifecycle management, including token issuance and smart securities enabling automated cross-border transfers.
- Regulatory Compliance: ISO 27001 and SOC Type II certified, licensed by the Monetary Authority of Singapore (MAS), Propine ensures compliance with all relevant regulations in this fast-evolving space.
ET: Who are your customers and how do they benefit from a service like yours?
TS: Propine's customers include institutional investors such as banks, asset managers, exchanges, blockchain protocols, fintech platforms, wealth managers and high-net-worth individuals.
To fully harness the potential of new technologies, both corporations and individuals must securely store and transfer their digital assets within a framework that is compliant with regulations and legally robust.
Existing solutions often require individuals and businesses to sacrifice either security or convenient accessibility. Several other concerns that crop up, include, but are not limited to:
- considerable lack of scalability in such solutions,
- manual intervention that creates opportunities for collusion and insider theft,
- potential single point failures,
- poor auditability of processes,
- mutable audit logs rendering them unreliable, and
- any attempt at increasing resilience commensurately increases the attack vectors.
As digital assets increasingly integrate into our daily lives and professional environments, it is imperative to establish infrastructure that ensures secure and compliant transactions. This framework should operate within a well-established legal structure that has proven its reliability over time. Among all industries, financial services face the greatest risk of disruption today, with every aspect of their operations—from deposits and lending to trading, clearing, settlement, remittances, payments, and asset management services—being challenged.
A regulated, institutionally robust digital asset custody service like Propine, underpins all these vertically integrated markets. Loss of control of an account’s private keys through cyber-attack or an operational mishap can result in irreversible asset loss. Our clients thus benefit from working with a partner that future proofs their business from all regulatory, operational and technical risks.
ET: The biggest issue for the sector has been around trust and security. How do you ensure that on the platform?
TS: Propine ensures trust and security through advanced technology and robust infrastructure. It utilises IBM HSM at the core which is FIPS 140-2 Level 4 certified, quantum-resistant key management, programmable non-tamper-able policy engines, protected memory enclaves and a dual-layer multi-signature system to protect against cyber-attacks, phishing attempts, manual, human errors and internal collusion.
Propine also conducts comprehensiveandregular security audits by reputable firms like PwC, NCC Group, and Deloitte. Propine has procured insurance from the best names in the industry and is fully licensed by MAS and ISO 27001 + SOC Type II certified.
ET: Cryptos have been a gray area with several regulators. How do you navigate the regulatory hurdles and ensure compliance with various laws?
TS: Propine has been very prescient about the growth of the digital asset ecosystem and the regulatory challenges that the market will eventually face. The company has actively collaborated with MAS and other global regulators to stay ahead of compliance requirements. In fact we started engaging with regulators as early as 2018 with an intention of setting up a licensed solution when pretty much rest of the industry was looking the other way, and vying to set up business outside of regulatory ambit to avoid scrutiny of their operations. Our active discussions led to Propine becoming the first and only company to enter a sandbox managed by MAS and we graduated from it with full license.
ET: When it comes to Bitcoin, we have seen several crashes. Do you think regulations could have prevented that? How do you ensure there is a balance between regulation and allowing innovations to happen?
TS: Creation of clear regulatory frameworks for new financial assets, such as digital assets, ensures that market participants understand the rules and their responsibilities, which fosters trust and participation. It is a clear sign of a maturing market.
Appropriate regulations have an important role to play to prevent extreme crashes and reduce volatility.
Regulations ensure there is a watchdog to monitor trading activities, to detect and prevent market manipulation, insider trading, and fraudulent activities. When irregularities are detected, these bodies have the authority to take enforcement actions, including fines, trading halts, and legal actions against violators. FTX and Three Arrows are high profile examples of such enforcement.
They protect investors by reducing information disparity between investors via enforcing material disclosure requirements on the companies. Additionally, regular and timely reporting increases transparency, allowing investors to make informed decisions, reducing speculation-driven volatility.
Suitable circuit breakers on trading venues, applied correctly, are proven methods to halt panic selling in a significant decline. Similarly, capital adequacy reserves help to cushion against significant losses, ensuring service providers remain solvent during market downturns.
Trading rules and short selling regulations can prevent excessive downward pressure on assets during periods of market stress. Margin requirements can prevent build of excessive leverage which can amplify market volatility.
Regulators often engage in educating investors about the risks and opportunities associated with new financial assets, ensuring that they make informed decisions. Regulations attract institutional investors by ensuring that the market operates fairly and transparently, bringing in significant liquidity and expertise which increases market depth, thereby reducing volatity. Finally, establishing standard practices and norms for new financial assets helps in creating a level playing field and reducing operational risks
However, it is equally, if not more important, to balance regulation with innovation. Here are some of the things steps and frameworks regulators as well as companies can take, to balance the risks, investor protection and innovation:
- Open Dialogue: Companies need to work with regulators to create rules that protect investors without stifling innovation.
- Adaptive Compliance: Continuously updating compliance practices to align with evolving regulatory landscapes while fostering technological advancement.
- Sandboxes: Initiatives like regulatory sandboxes allow new financial technologies to be tested in a controlled environment, promoting innovation while ensuring regulatory oversight.
- Standard Practices: Establishing standard practices and norms for new financial assets helps in creating a level playing field and reducing operational risks.
ET: Cryptos and Blockchain have been around for some time now. Blockchain, particularly, holds a lot of promise. However, we still see very limited adoption of the technology across sectors. What is stopping the tech from being more widely accepted?
TS: Several factors hinder wider adoption of blockchain technology:
- Regulatory Uncertainty: Inconsistent regulations across jurisdictions create barriers to adoption. The regulatory environment is also continuously evolving, making it challenging for businesses to keep up and ensure compliance.
- Scalability Issues: Current blockchain solutions often struggle with scalability, affecting their ability to handle large volumes of transactions. High transaction volumes can lead to network congestion, increasing transaction times and fees.
- Integration Challenges: Many blockchain networks operate in isolation, lacking interoperability with other blockchains and existing financial systems. Integrating blockchain with legacy systems is complex and costly.
- Environmental concerns: Many blockchain networks, particularly Bitcoin, use PoW consensus mechanisms, which are energy-intensive. The high energy consumption of blockchain networks raises environmental concerns, leading to negative perceptions and regulatory scrutiny.
- Complexity and Usability: The technical complexity of blockchain technology can be a barrier to entry for both developers and end-users. Further, blockchain applications lack user-friendly interfaces, making them difficult for non-technical users to navigate.
- Security Concerns: While blockchain itself is secure, the surrounding infrastructure (e.g., exchanges, wallets) can be vulnerable to hacking which deters users from participating.
- Cultural and Organisational Resistance: Organisations may be resistant to adopting new technologies due to the cost, complexity, limited understanding of blockchain among decision makers, and cultural shift required.
ET: What significant trends are you observing in the digital asset industry in Asia?
TS: In Asia, Major financial institutions, including banks and asset managers, are increasingly participating in the digital asset space. This is driven by the potential for high returns and the growing acceptance of digital assets as a legitimate asset class.
Countries like Singapore and Japan are leading the way in establishing clear regulatory frameworks that provide legal clarity and foster investor confidence. This has spurred technological advancements and innovations in blockchain technology, such as improved scalability and interoperability.
DeFi platforms are also gaining significant traction in Asia, offering innovative financial services such as lending, borrowing, and yield farming without traditional intermediaries. This trend is particularly strong in countries with robust fintech ecosystems like Singapore and Hong Kong. Regulators are beginning to engage with DeFi projects to understand their impact and potential risks, aiming to balance innovation with consumer protection.
There is a growing interest in tokenizing real-world assets such as bonds, real estate, commodities, and art. This allows for fractional ownership, increased liquidity, and broader investor access.
Similarly, more businesses are accepting cryptocurrencies as a form of payment, driven by the increasing consumer demand for digital payment options. This trend is especially evident in tech-savvy markets like South Korea and Japan. Companies are developing integrated payment solutions that combine traditional and digital assets, providing seamless transaction experiences for users.
Companies are leveraging blockchain for supply chain management to enhance transparency, traceability, and efficiency. This is particularly prominent in sectors such as agriculture, pharmaceuticals, and electronics.
We also see early emergence of secure and tamper-proof digital identities on the blockchain to streamline KYC processes and reduce fraud. For example,Selfkey, is a blockchain-based identity platform used by financial institutions and government bodies in Asia.
ET: How do you foresee the growth trajectory of digital assets in the region in the coming years?
TS: The digital asset market in the Asia-Pacific (APAC) region is poised for significant growth in the coming years, driven by several key factors. Continued development of clear and supportive regulations. Growing involvement of institutional investors, asset managers and banks will provide stability and credibility.
Innovations in blockchain technology are addressing scalability issues, making it possible to handle larger volumes of transactions efficiently. Layer-2 solutions and improved consensus mechanisms are examples of such advancements.Development of interoperability solutions that allow different blockchain networks to communicate and operate together seamlessly is enhancing the utility and adoption of blockchain technology.
ET: What future trends in digital assets are you most excited about, and why?
TS: I am personally most excited about the disruption in value transfer space. The very concept of “value” which is today captured in monetary terms alone, will be expanded. This will allow unbundling and monetization of different types of values, creating new economic opportunities. It will have a ripple effect on how businesses and their customers interact. Add the progress in AR/VR to it and we will see entirely new business models emerge for immersive customer experiences.
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(Catch all the Business News, Breaking News, Union Budget 2024 Events and Latest News Updates on The Economic Times.)
Subscribe to The Economic Times Prime and read the ET ePaper online.