Lacero (Platform for crypto safeguarding to sit on top of custody solutions)
Hi Rashid, after a career in investment banking you started Lacero with Yuri Vizitei and Stuart Winter, can you share a bit of the background on yourself and your team members and how you met them?
Whilst working in finance I was an active investor in technology startups, and an LP in some outstanding early-stage tech funds like Hoxton Ventures and Entrepreneur First. When I met my partners Yuri and Stuart they had some very compelling technology — an invention for Data Security — that they had developed and were looking to commercialise it. I was so impressed and saw such significant potential that we agreed I would join them as a partner to help bring its value to the market.
How did you get into the Bitcoin and blockchain industry?
My specialties in banking included FX, derivatives and international payments so Crypto was a natural progression. I began to really understand the full scope of Blockchain and Smart Contracts in a broader strategic context, convinced by its potential to revolutionise business processes in both finance and elsewhere.
I took the view early on that financial assets will tokenise and move to DL’s — not just as stablecoins or altcoins, but eventually as fully enforceable legal tender and securities. And that a new infrastructure would need to be built ground-up for this, not just for basic custody and settlement, but also margin and clearing for all instruments including derivatives. But with DL this can all be done in radically more efficient ways
Tell us a bit more about Lacero. Are you hiring?
We have just launched our platform for crypto safeguarding to sit on top of custody solutions.
We are not focused on the key storage/holding/HSM/Custody/MPC solution piece. There are many excellent firms doing this brilliantly. We are focused only on one critical part — helping clients create and then enforce their policy that determines the circumstances under which keys can or cannot be used across their pool of ‘instructees’ eg custodians.
We do this in a decentralised way such that the combination of having to prove policy compliance in our environment and then communicate that cryptographically into a secure custodial environment is a very powerful combination.
So we are looking to be a front-end solution for the asset owner that gives them secure, autonomous, transparent control of their policy in their own environment, securely connecting into their chosen custodial solution or solutions, whether that is cold storage, HSM’s, MPC provider or a self-custody solution.
We would like to add more London-based engineering, commercial and client-facing people over time. We’d also like to build coverage capabilities in the US, Middle and Far East.
What is the long-term vision of Lacero?
To be the “Policy Enforcement Service” for the market — improving security, control, governance and transparency. We want to be the ‘secure connector’ — allowing everyone to better operate, transact and communicate with each other in a secure, fully decentralised manner and effectively de-risking the network and making it more interoperable.
We’re additive and enhance existing arrangements. So we’d like everyone to be ‘powered’ by Lacero as an independent layer. Further out, we’re excited by the possibilities Smart Contracts allow for all sorts of Programmable Custody functions, including DvP, margin and collateral management, lending/repo and derivatives.
Where does Lacero fit with the cold storage solution like Ledger or a custodian like Coinbase?
We think of ourselves as a ‘key custody decentralisation layer’. We’re custody agnostic and aim to support all types of custody arrangements including hot and cold wallet systems, third-party custodians, MPC providers and self-custody arrangements. We don’t say use us instead of a Custodian, HSM or MPC storage layer — we say use us in addition to them. And we make it easier to combine multiple custody solutions.
It’s an addition that can only improve the security, control and governance environment. Two independent channels in parallel are safer than one, especially when one (like ours) is fully decentralised.
Indeed, our first customer selected two complementary technologies to give them ultimate safeguarding — our decentralised policy engine in combination with another provider’s secure MPC wallet architecture.
What’s your business model?
Very simple — no transaction or AUM fees, just a fixed monthly fee for a certain amount of usage.
Who is your target audience?
Institutions who transact frequently across multiple addresses, have multiple employees and that care about managing their entire suite of operational risks in a fast, user-friendly way. So primarily market-makers, brokers and active trading funds. But also custodians and PB’s.
We can act as a decentralised secure confirmation channel to their clients, putting a truly distributed ‘control system’ on client desktops, cryptographically verifying instructions and proving authority to transact. It’s as security-enhancing for custodians as it is for the asset owners themselves. Very importantly, it can allow for all this enhanced security and control without adding burdensome workflows or complexity to the end-client, allowing them to grow and scale with confidence.
Can you share a bit more information on what makes Lacero unique compared to its competitors?
We’re the only blockchain technology-based offering in the market for safeguarding blockchain-based assets.
We fundamentally believe in the power and benefits of decentralisation, and offering a truly autonomous, trustless, product. Everyone uses cryptography, but what makes us different is our use of blockchain and in particular pre-audited Smart Contract modules. At the core of our offering is ‘Policy Enforcement as a Service’ (PEaaS)’ — managing Who is allowed to do What with Whom and When with your assets in a precise way that fits the way your firm works. Others, even those using advanced cryptography like MPC do this part with traditional IT methods and centralised code on a hosted infrastructure, which cannot ever be truly trustless.
Can you ever positively determine that it is fully secure, with no malware, trojan horses or infrastructure or people vulnerabilities? You cannot if it’s their infrastructure, their environment, their people, and you have a dependency on them. Do you want that? Lacero’s technology is radically different because we actually use a DL and are a blockchain-based application, fully distributed with no centralised code sitting in a server somewhere.
We have no access to keys or control of the infrastructure. We provide radical transparency into the Smart Contracts, which themselves are independently audited by an expert third party. True autonomy, sovereignty, trustlessness, following the foundational principles of decentralised blockchains, and we believe demonstrably more secure as a result.
What are your thoughts on the crypto European ecosystem?
Overall I’m very impressed by the professionalism and openness of the community. The increasing focus on institutional-grade solutions that meet the highest standards of transparency and compliance for expected regulatory standards is encouraging.
It’s the best of institutional operating standards combined with innovative, disruptive technical vision. I hope it will develop into one that is naturally co-operative and ‘win-win’ mindset driven — where people can use a variety of chains, protocols, Dapps and functional layers to assemble their optimal operating environment in a modular fashion, using the products and services that add the best value.
Are there any recent industry news that you would like to highlight?
Libra, succeed or fail, will be remembered as a key moment when the wider world realised the crypto genie is out of the bottle — and it’s not going back! It accelerated the conversation to help governments and central banks see beyond only Bitcoin into a broader future of tokenisation of all financial assets — equities, bonds and fiat money itself — that will create better, new global payment, settlement and clearing rails and democratise money. But it has also accelerated the debate on regulation and central control. The challenges for the structure of money supply are profound, but so are the opportunities, and my guess is that ultimately there will be a balanced, agreed path forward.
Anything to add?
It’s important to remember the fundamental why of DLT and decentralisation.
Those who used to ask “What’s the point? And why is this better?” are now seeing tangible benefits across a really broad spectrum of use cases — data security, zero-reconciliation post-trade, true golden source self-maintaining databases, the democratising power of fractional ownership, open-access global payment, clearing rails and financial inclusion.
And of course greater data privacy, autonomy and sovereignty — all of the things that were promised, but not fulfilled in Web 2.0 but are now finally possible in Web 3.0. It’s wonderful and exciting to be part of it.
Published at Sun, 24 Nov 2019 12:58:07 +0000
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