How Financial Institutions Custody Digital Assets

minute read

As financial institutions increasingly look toward digital assets, custody has become a critical issue. When assets such as cryptocurrency are being increasingly traded and managed by institutional investors, the need for a dependable custody solution becomes evident.

Consumers are looking for a solution that is both secure and compliant with regulations. To offer digital asset custody services, providers must have a deep understanding of the technology and the regulatory landscape. Digital asset custody can take many forms, but it is the safekeeping of digital assets on behalf of clients at its core. If you are looking to begin offering digital asset custody services, read on to learn more about what it entails and how providers meet institutional investors' needs.

What is Custody?

Custody is the term used for the safekeeping of assets. This can be anything from physical items like jewelry or art to more intangible assets like stocks, bonds, and digital currencies. In the world of finance, custody refers to financial institutions that are responsible for holding assets on behalf of their clients. There is an additional layer of complexity with digital assets because these assets are stored on the blockchain, a decentralized network that is not under the control of any one party. This means that digital assets need to be stored in a way that is secure and monitored.

For institutions to effectively manage digital assets, they need a custodian who can provide the necessary infrastructure and expertise. A digital asset custodian is a financial institution that offers storage and management services for digital assets.

Why Custody Matters

Custody matters because it is a critical part of expanding the capabilities of financial institutions with digital assets. With an ever-growing pool of institutional investors, there is a growing demand for custody services that can meet the needs of these customers.

As an asset manager, you need to be able to offer your clients access to this growing market for digital assets. To do so, you'll need a trusted partner in digital asset custody to do so. This includes having access to secure storage and transparency into the transactions taking place. At the same time, there are several regulations that can play a role in custody services. These include Know Your Customer (KYC) and Anti-Money Laundering (AML) rules, which require financial institutions to verify their clients' identities and monitor suspicious activity.

As digital assets become more widely accepted, custody services will likely become more regulated. This is something that you need to be aware of as you consider working with a digital asset custodian.

What Does Digital Asset Custody Look Like?

Digital asset custody looks like any other type of custody service but with the added layer of security that is needed for blockchain-based assets:

  1. A digital asset custodian will hold the private keys necessary to access your digital assets. Multi-signature authorization is often used, requiring multiple parties to sign off on transactions before they can occur.
  2. The custodian will have established processes to monitor suspicious activity, including compliance with KYC and AML regulations.
  3. You'll have access to detailed transaction records that provide transparency into your digital assets.
  4. The custodian will provide secure storage for your digital assets using online (hot) and offline (cold) methods.
  5. You'll have 24/7 customer support if you need assistance with anything related to your digital assets.

With the right custody partner, you'll be able to offer your clients the peace of mind that comes with knowing their digital assets are in safe hands. This will allow you to focus on what you do best, managing your client's portfolio.

What Are The Benefits of Digital Asset Custody?

How Sequoir Helps Financial Institutions with Digital Asset Custody

At Sequoir, we specialize in providing digital asset custody services to financial institutions worldwide. Our security experts and compliance professionals help clients provide secure custody services to consumers while also meeting regulatory requirements. Our innovative APIs offer various tools and services, such as trading platform integration, analytics, and more. We also provide multi-signature capabilities to ensure that multiple people approve each transaction before processing it.

The Highest Security Standards

Built on unique hardware and the highest safety standards in the world, our infrastructure has been independently audited and certified by leading third-party experts. Our compliance framework ensures that all transactions are compliant with the latest regulations.

Sequoir has partnered with BitGo to provide secure custody
Trusted By Industry Leaders

Sequoir has partnered with BitGo to provide industry-leading custody that meet the needs of financial institutions. Through BitGo, you can store digital assets safely and confidently, knowing that an industry-leading team is holding your investments.

Audit & Reporting Expertise

Sequoir offers certified reports and on-demand reporting for administrators. This data can be used to show compliance with various regulations, assess risk, and more. Our team of experts can also help you interpret this data and make informed decisions about your digital asset investments.

Customizable Services

At Sequoir, we understand that every financial institution is unique. That's why we offer a range of customizable services and solutions that we can tailor to meet your organization's specific needs. Easily adapt the Sequoir platform to your organizational preferences and conditions, and watch your digital assets under management grow. If you're looking for a trusted partner to help you provide blockchain solutions to your users, look no further than Sequoir. Learn more about our digital asset custody solution today and start investing with confidence!