Why we need custodial solutions for crypto
An exchange, though, is primarily focused on liquidity, whereas a custodial solution will be more focused on security. Some larger exchange platforms are adapting by adding either third-party custodians or registering themselves as custodians. Security issues with hot wallets that we mention below illustrate the limits of merely setting up shop and building the technology as you go. The centralised exchanges used to buy, and exchange cryptocurrencies have provided some essential custodial services as the exchange holds the wallets. In this sense, crypto-custodial solutions can perform active asset management on behalf of clients. A custodian could thus aggregate holdings of multiple clients to create large enough positions to generate passive income for all parties involved. Crypto-custodial solutions have some great opportunities in this field, for example, with cryptocurrencies based on Proof of Stake algorithms. Such services typically include financial reporting, price tracking or dividend redistribution. Traditional custodian banks such as JP Morgan or BNP Paribas usually provide additional services to manage the funds in their care. In the form of financial institutions providing the secure storage of financial instruments to reduce risks or even remove them altogether when insurance mechanisms are involved too. Custody has been around a long timeĬustodial solutions have existed for decades. These reasons converge so that, as we’ll see in this blog, trusting an entity with safeguarding your crypto-assets is an appealing prospect. Crypto is also still too complex to manage for most of us. In crypto, there is a very impactful difference:Īnd so with crypto, there’s no way of changing the locks if the key is lost or compromised.
BLOCKCHAIN WALLET REMOVE PASSWORD
A key, again physical or digital - such as a login and password - provides access to the monetary assets. Traditional money - or Fiat money - is kept safe by being locked away somewhere, whether physical or digital.
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