Digital assets custody: An evolving landscape
Both retail and institutional investors need to protect their digital assets in the same way they protect their cash, their stocks and their bonds.
Over the last few years, the digital asset market attracted a growing number of investors. The total market capitalization currently valued at $812B reached an all-time high of $3Tr in November 2021.
Yet, as with traditional assets and money, investing or owning digital assets necessarily involves the storage and protection of these assets, that is, custody. And what more, digital asset custody comes with a variety of choices, each with its own risk, advantages and implications.
The events that marked the digital assets space recently have emphasized the relevance and importance of this core function of the traditional financial infrastructure which has been around for ages.
Whether it be the collapse of Celsius or the scandals of FTX, the choice of custody method and of the type of custodian will impact what happens to the assets when the worst case scenario materializes.
It is one of the main question to be asked whenever contemplating investing in digital assets, be it Ethereum or Bitcoin, or tokenized assets like real estate tokens or gold tokens or NFTs.
This article presents the key different custody options currently available to different types of investors, while exploring the fundamentals of custody to be thought of moving forward.