Company Secure Its Digital Assets
Institutional digital asset custody services can help a company secure and manage their digital assets. By combining the power of blockchain and the security of traditional financial assets, these services can provide the necessary protection and support for digital assets. For example, institutional investors often want to store their coins at a bank, where they can be sure that their funds will be secure.
Corporations have also become interested in digital asset custody. Some have even started investing in existing custodians or buying technology solutions. However, the majority of adoption is still driven by retail clients. Coindesk recently conducted a study to track the interest of corporations in digital asset custody. Although it’s still largely a retail-driven business, corporate interest is increasing.
As the cryptocurrency market has risen, institutions have been investing more heavily in digital assets. They don’t need to access crypto funds often, but they also require greater flexibility than retail investors. In addition, institutional investors are likely to need higher-grade custody services. Typically, these services include accounting, KYC/AML integrations, prime brokerage services, and DeFi integration.
When choosing a custodian, it is important to understand the different kinds of assets. Some digital assets are created on different blockchain protocols or issued by different market actors. Because of this, custodians will likely maintain a diversity of digital assets that they manage. For example, institutional users can choose a custodial service that offers multi-signature services.
How Institutional Digital Asset Custody Services Can Help a Company Secure Its Digital Assets
Institutional digital asset custody services must meet a number of requirements to maintain security and compliance. These include providing access to custodied funds on demand within an acceptable service level agreement. In addition, providers should ensure that their services are safe and secure by applying multiple layers of security. And they must also integrate with established systems and processes.
In order for institutional investors to successfully participate in the cryptocurrency and digital asset markets, they need a custodian. A third-party custodian will safeguard the digital assets while allowing institutions to understand the crypto space and stay compliant with regulatory requirements. As a result, institutional investors can make better decisions with digital assets and meet the requirements of conduct regulators.
Custodians protect investors’ private keys by storing them both online and offline. They also use multiple methods of approval to ensure that investors’ private keys are safe and secure. Choosing the right digital asset custody provider is a crucial decision and should be done after thorough research. In addition to security, it is also important to consider the regulatory framework surrounding the custody provider. This should be complemented by insurance provisions and the legal basis of the assets being held.
While many of the initial players in this market are Fintechs or crypto-asset specialists, there is a growing number of traditional players, including banks, that are preparing to enter the space. For instance, Fidelity, a leading asset manager, announced that it will offer digital asset custody services beginning in March 2019. Many challenges remain, including security of transaction addresses and private keys. Additionally, custody providers must ensure that third parties can access the relevant information without compromising security.