Everything About Crypto Custodian And Its Importance

The increase in mass acceptance of Cryptos and the growth of this industry are leading to the need to build more secure ways to keep them safe. Most often, you may opt to store your Cryptocurrencies in digital wallets or with a crypto custodian. In these wallets, you can access the assets with the help of private keys.

Despite having wide usage of these wallets, private hacks are more prone to hacks and thefts. You can also lose your private keys and never get access to them! In such cases, the Crypto custodian can help you to secure your assets and have safe access to them. Make sure to read this blog and find out more about this aspect!

What Are Crypto Custody Services?

The term “custody” is quite well-known in the financial market. Custodians play the role of safeguarding digital assets. These institutions act as an important platform to protect the investments of investors and reduce their chances of losses.

In earlier times, the custodians kept the assets in the form of bond certificates and physical stocks. However, with technological advancements, the assets are now stored in electronic form. With the development of Cryptocurrency custody services, the method of safeguarding them has changed!

In simple words, crypto custodians keep your digital currencies safe from any kind of theft or loss. It is a third-party organization that lends out its services against some fee.

The main aim of this custody is to let institutional investors get hedge funds. But, in many countries, having crypto custody is a legal requirement. This custody will keep your private keys safe, without letting you lose the same.

How Does This Organization Work?

The procedures might differ for different custodians. But the basic steps involved in the process are:

Registration: You need to register with a Cryptocurrency custody solution provider.

Different Checks: After registering, you will have to go through AML and KYC checks. 

Transferring Assets: Now, you will have to transfer the digital currencies to all the wallets held by the custody providers.

Importance Of Crypto Custodian For You

Cryptocurrency custodians play an important role in keeping your assets safe. And there are some prominent reasons why investors rely on such organizations. These are:

Security:

The major aim of switching to crypto custody is to maintain the security of all assets. Crypto custodians are a great way to protect assets from any kind of cyber theft and loss!

To access the Cryptos from your wallets, you need to have the private key handy! Because without it you cannot use your Cryptos for trading or transactions. And the private keys are quite complex which makes it almost impossible to recall them without keeping a note.

Also, these keys are at high risk of getting stolen or falling under cyber hacks. Though such wallets were thought to be a better solution once, now it is more prone to hacks. This means that digital wallets are not a safe option anymore!

Maintaining the private keys is a tough task, as you need to write them down on paper or save them on a hard disk! This carries a higher risk of losing the keys, which means losing all the Cryptos. To save you from all such losses, a Crypto custodian will be there for you!

Regulation:

Regulation is another major factor in why investors are choosing crypto custodians. SEC regulations have announced that under their Dodd-Frank Act, custodians are vital. The law states that institutional investors who have more than 150,000 USD worth of Crypto need to sign up with a custodian.

They need to register with a qualified and reliable custodian. Because the regulation considers these entities as banks, savings, associations, and others that need to be protected.

So, the major consumers of such custodian services are investors with high amounts of crypto. With the help of these custodians, you can enjoy safe investments!

Conclusion

For any institutional investor with a huge amount of investment, it is quite important to register with a custodian. Make sure to find the right crypto custodian for your investments. And you can consider several factors to ensure the safety of your investments.

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