Safeguarding the future of digital assets: the challenges facing digital asset custodians

Written by Mark Turner and Rowan Milne

The principle of custody services for securities and other traditional assets is well established and enshrined in law. Put most simply, custody separates by legal mechanisms an assets holder from its beneficiary. This protects beneficial owners in cases where the holder of their assets becomes insolvent. In the UK, a comparable legal framework has not been defined for crypto assets despite market demands driving the increasing incorporation of businesses providing ‘crypto custodian’ services under the FCA’s general ‘cryptoasset’ registration regime.

Selection of digital asset custodians

Source: Teamblockchain

The custodian sector is highly fragmented. While some larger providers of digital asset storage solutions remain associated with the larger exchanges, there is a growing new breed of pure custody providers seeking to capitalise and on and foster the growing adoption of digital assets by those most familiar and comfortable with traditional finance (or “trad-fi”) and the norms thereo…