As announced as an exclusive in CoinDesk today, gumi Cryptos Capital led the $6M seed round into Keyring, a core infrastructure for regulated access to DeFi by institutional large financial players like coinvestor Laser Digital, a subsidiary of Nomura group, one of the largest traditional market makers and financial institutions in the world.
Since 2017, Galaxy’s Mike Novogratz has been saying “the herd is coming” referring to the mass of traditional institutional capital, but overlooking the persistent challenges of compliance in on-chain finance. Regulated institutional investors — whether already allocated to crypto assets or waiting on the sidelines —must adhere to basic compliance policies. These policies necessitate the verification of counterparties as legitimate entities (e.g., accredited, registered in certain jurisdictions) and ensure they are not sanctioned. Currently, attaining such a standard of compliance presents a considerable obstacle, leading the market to predominantly rely on whitelisting approaches, typically applied on a per-application basis.
The founders of Keyring experienced this challenge firsthand while navigating institutional fund allocations within the crypto sphere. Consequently, they embarked on a mission to develop a solution that facilitates portable on-chain compliance.
On-chain compliance for assets and contracts
Keyring is a zk-based KYC layer with a customizable policy engine that leverages continuously refreshed credentials issued from established, regulated KYC/KYB providers. Their solution is implemented at both the asset and contract levels.
Asset-level enforcement is accomplished through wrapping to permission the transfer functions. Anyone can wrap and unwrap at will, but only users who have undergone KYC verification (and hold the continuously-refreshed credential that confirms this) will be able to interact with the asset. Protocols can also integrate Keyring directly into their contracts. This gives them the flexibility to permission the specific portions of their protocol, such as minted LP tokens or receipts.
Customization: the key to adoption
Each institution has their own unique compliance needs and risk thresholds for counterparties, and Keyring has architected their solution for complete customizability in these areas with their policy engine, which enforces the ability for institutions to interact with one another.
The flexibility of Keyring’s smart contracts enables composable compliance in a way that was not possible before. The innovation of a shared ledger brought huge reductions in operational complexity as back offices no longer need to settle independent records; however, compliance remains necessarily fragmented by regulatory requirements. Keyring solves this issue with their solution and provides a layer above the fragmented regulated entities that securely shares the onboarding information in accordance with admission policies.
Keyring thinks of compliance like a social network graph, where edges represent the willingness to interact. In the same way, capital flows through these compliance graphs. Keyring’s rules can be built to represent any requirements as a decision tree and they are able to capture and identify similar requirements as sub-trees giving the end user a rapid onboarding option with low friction to maximize composability.
World-Class Team
Keyring boasts a formidable institutional team led by Co-founders Alex McFarlane and Mélodie Lamarque.
Alex brings extensive experience as a VP at Nomura, working in various quant roles across his six years at the firm. As he spent more time in DeFi and wanted to deploy capital on-chain, he encountered the stark reality of the current landscape’s inadequacy in compliance infrastructure. Recognizing the imperative for a zk-based KYC layer to facilitate institutional participation in DeFi, he co-founded Keyring alongside Mélodie. Alex is an “insanely smart” technical leader with a background in high energy physics with graduate training at the Higgs center for theoretical physics at the University of Edinburgh.
Mélodie most recently was an investor at Hedosophia, a growth equity fund in London. Prior to this, she spent 5 years at JP Morgan working in the M&A and Digital Investment Banking divisions. Leveraging her intimate understanding of the compliance needs of “traditional” institutions, she not only contributes to architecting Keyring’s product to meet these demands but also possesses the acumen to effectively convey the message to these institutions. Mélodie is quoted here speaking about Keyring’s USDC transfer tests with Laser Digital on TheDefiant.
Conclusion
Led by an exceptional institutional team working closely with Nomura, Keyring has meticulously crafted its infrastructure to meet the exacting standards of institutions, enabling them to conduct transactions on-chain. This will serve as a catalyst for currently sidelined institutions in the crypto ecosystem to actively participate, while simultaneously expanding the range of use cases (and liquidity) for those already transacting in the space in a limited capacity today.
Keyring is now live and currently onboarding customers – if you are interested in using their solution or just learning more, you can get in touch and dive in deeper here.
Disclaimer
Information is provided for general educational purposes only. This presentation is not an offer to sell securities or a solicitation of offers to buy securities. Nothing contained herein constitutes investment or other advice nor is it to be relied on in making an investment decision. For more important information, please see disclaimer
