Institutional digital asset custody : Considerations, challenges and the evolving regulatory landscape

Abstract

Custody is integral to preparing for, and engaging in, the token economy. Without it, financial institutions, investors and consumers cannot use tokenised assets or move, manage and tokenise value in a safe, secure, scalable and compliant way. Given the growing breadth and importance of digital assets — from stablecoins and cryptocurrencies to tokenised real-world assets (RWAs) like stocks, bonds, commodities, real estate and more — market participants require custody in order to unlock access to these new asset classes and the broader token economy. If digital assets are the vehicles, then custody is the road that paves the way and enables the industry to get from point A to point B. Blockchain and digital assets have spread across myriad industries as the number of real-world use cases grows and progressive regulatory regimes take effect. And it is imperative that institutions understand both the considerations and challenges of crypto custody to better prepare for this next evolution in global finance. In this paper the author seeks to directly address this by considering the challenges and evolving regulatory landscape for institutional digital asset custody, specifically by offering examples of the increased tokenisation of real-world assets, comparing traditional with digital asset custody, and setting out the different custody models. The article continues by examining regulatory considerations for digital asset innovation before concluding with possible future developments. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.