Understanding Asset Custodians for Digital Assets
In the case of digital assets like BTC and ETH, the custodian takes on the role of protecting and managing these assets.
Digital Asset Custody
Unlike traditional assets, the custody of digital assets requires sophisticated security measures and internal controls to ensure the safe storage of clients’ assets.
Digital assets come with unique risks. For instance, if a person loses their private key, they will lose access to their assets, presenting a significant long-term risk.
Regulated Safety Measures and Compliance
Due to these challenges, institutions often rely on third-party custodians to manage and store their digital assets.
Digital asset custodians typically need to obtain a license from regulators in their jurisdiction to demonstrate compliance with safety and security standards.