Cryptocurrency exchange KuCoin has launched a feature allowing users to custody their own crypto assets while trading.
For the feature, KuCoin has integrated a new technology from Boston-based startup Arwen, which allows traders to maintain control of their private keys while trading on centralized exchanges, Arwen announced Tuesday.
KuCoin president Eric Don confirmed the news, telling CoinDesk:
Arwen said that, with its technology, trades are executed via a "layer two" blockchain protocol that allows traders to benefit from “the full liquidity and speed of the centralized exchange’s orderbook.”
The startup went on to explain that it enables secure trading between parties without the need for trust by relying on the traded cryptocurrency’s native blockchain.
For example, security for trading bitcoin is provided by the bitcoin blockchain, while security for trading bitcoin cash is provided by the bitcoin cash blockchain, it said. “This is in contrast to other approaches ... which require the introduction of a completely new blockchain that traders must trust," said Arwen.
As KuCoin's implementation of the tech is launched in beta mode, the service is initially limited. Escrow sizes are limited to about $100 and trade sizes are limited to about $25 as a standard security measure, the company said.
Traders will need a know-your-customer (KYC)-verified KuCoin account to get started with the service, and they should neither be located in the U.S. nor in countries sanctioned by the U.S., Goldberg added.
KuCoin is also planning to build its own decentralized exchange, KuCoin CEO Michael Gan revealed to CoinDesk, saying “the cooperation with Arwen is our first step, realizing fund custody in a decentralized way and ensure the security of users’ digital assets.”
Arwen launched a testnet version of its protocol earlier this year, saying a plan was in place to integrate with KuCoin. The firm said today that it is in talks with other exchanges, as well as hardware wallets and institutional custodians, for similar collaborations.
Singapore-based KuCoin is backed by IDG Capital, Matrix Partners and Neo Global Capital, having raised $20 million in Series A funding last November.
Edit (11:45 UTC): Corrected the limits to trading while in beta mode.
KuCoin image via Shutterstock
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.