Digital asset custodian Balance claims it has reached $2 billion in assets under custody (AUC) once again as the crypto market recovers from its 2022 crash.
With Bitcoin more than doubling in value over the past year, and crossing $1 trillion in market cap again last week, Balance says it is now seeing the crypto market regain its footing, and its clients are beginning to explore new products and offerings.
Balance’s resilience has been tested with “an existential gut punch every six to eight months.”
“The 2022 bear market tested our resilience, taking our business from a high of $2.5 billion AUC to a low of $500 million at some point,” Balance CEO George Bordianu said in a statement. “I’m grateful our team was up to the challenge and rebuilding to $2 billion in AUC is a testament to their hard work and unwavering commitment to our clients.”
Founded in 2017, Balance claims to be Canada’s oldest and largest digital asset custodian. The startup stores crypto assets for various entities across Canada, some US states, the British Virgin Islands, and the Cayman Islands including crypto exchanges, neobanks, and private funds.
In its years of operation, Balance’s resilience has been tested with “an existential gut punch every six to eight months,” Bordianu told BetaKit in an email statement, adding that running lean has gone from a core value to part of Balance’s DNA following the 2022 pullback.
Balance completed a Systems and Organization Controls (SOC) 2 Type I audit in the middle of the 2022 crash. The audit, a key industry benchmark in the crypto space according to a Deloitte report, is a prerequisite for Balance to serve investment dealers, mutual fund dealers, and portfolio and investment fund managers.
Bordianu said Balance has gathered enough experience serving different kinds of clients to become “quite comfortable” with its position in the space, and that it’s focused on becoming a qualified Canadian custodian next.
Following Balance’s SOC 2 audit in 2022, Bordianu told BetaKit that the majority of the market opportunity for digital asset custody in Canada was in Ontario. Balance sees things differently now, having relocated its headquarters from Toronto to Calgary at the end of January.
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“There is a keen interest in attracting and fostering business into [Alberta], versus putting additional red tape in place,” Bordianu said. “We’ve knocked on many doors in our company’s history and heard the word “no” many times. We don’t have a problem with that, but at some point the reasonable choice is to go where you’re welcome, rather than try to become liked where you’re not.”
Bordianu added that Alberta’s regulatory environment provides the structure Balance needs to become a qualified custodian, without having to satisfy regulatory requirements it doesn’t perform, such as deposit-taking.
Balance said Invest Alberta, a crown corporation that aims to foster investment in the province, has helped in the transition by providing introductions to local service providers, talent, and helping with relocating staff.
As part of its move, Balance said it expects to hire up to a dozen people, including engineering and C-suite positions, such as a CFO and a chief compliance and risk officer, by the end of this year to ramp up in 2025.
Once Balance has those roles filled, Bordianu said the company will launch a new product it has been working on “for quite a while” and get qualified custodian status.
“Our long-term vision is to become a fully-integrated post-trade platform, offering custody, settlement, and clearing services,” Bordianu said. “Custody is the cornerstone of this stack, but it’s just the start, not the end of it. It’s a very long journey that will take many years and include obtaining all sorts of licenses and registrations.”
UPDATE (02/23/2024): This story was updated to note responses from Balance CEO George Bordianu. This story has also been corrected to note a SOC 2 Type I audit is a prerequisite for, rather than enables, the servicing of investment dealers, mutual fund dealers, and portfolio and investment fund managers.
Feature image courtesy Balance.
