For many across the globe, Knøx is a name associated with protecting gold, as Fort Knox is the storehouse for much of America’s gold assets. Now the name is being used by a Canadian-based company who will be providing a digital asset custody service while also providing comprehensive insurance coverage for those assets.
Knøx is a startup company that has only been in operation for days, but they are coming out making a bold and innovative statement. They had raised $8.25 million in seed money in their initial round of funding, and are offering this new custody service for institutions and fiduciaries.
Initialized Capital was the leader in the initial funding round. Also supporting the initial funding round for the San Francisco-based company were Fidelity and iNovia. Knøx has stated that they intend to use their other monetary resources to fund other offerings.
Knøx has focused their initial service toward the assets of management firms, liquidity providers and exchanges. Their specific goal is to provide protection against any kind of loss. Alex Daskalov, co-founder and CEO of Knøx, explained:
Entities who have their digital assets managed by a third party deserve the right to insurance. Too often, insurance policies are purchased for marketing purposes instead of transferring the risks that matter. Our insurance program is designed to help fiduciaries meet their obligations.
The benefit of using Knøx over any other service is that they are providing 100% coverage of all assets. This, according to the company, separates them from all others:
A customer with $100 million in digital assets may choose to keep their funds with a custodian holding $1 billion in assets, and advertising a $100 million insurance policy. The custodian is 10% insured, yet the customer is given a false sense of security believing that the $100 million policy will be able to cover their holdings. In fact, in the event of a total loss, the customer will be reimbursed $10 million, forced to accept a $90 million loss. The total limit is most commonly shared across clients.
This is the problem that Daskalov looked to address. “We really looked at this problem and said, if we needed to do something like store, say, a quarter of a billion dollars in [BTC] with some entity, what would we expect from an insurance policy so that we could actually gain confidence with that company. We designed the insurance policy with that in mind.”
What is interesting for Fidelity is that they are already offering their own BTC custodial service. It is interesting that they would choose to fund a competitor, but the differences in protection may have been an enticement to fund the startup company.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
