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As the digital asset ecosystem continues to evolve, institutions are increasingly recognizing the need for secure, compliant, and reliable solutions to manage their digital assets portfolio.
Digital assets are becoming more integrated into traditional financial portfolios, attracting the attention of banks, asset managers, family offices and other institutional players. However, with this increased adoption comes the need for robust digital asset custody and portfolio management solutions to safeguard these assets effectively and efficiently in addition to the regulatory requirements set within each jurisdiction.
The Growing Need for Digital Asset Custodians
Institutional investors remain committed to digital assets, despite short-term challenges. According to Fidelity Digital Assets’ 2023 Institutional Investor Digital Assets Study, almost half (49%) of respondents noted concerns about fraud and negative press influencing their views on digital assets. However, the study also highlights that long-term sentiment remains strong, with interest levels comparable to those seen two years ago—before the approval of bitcoin spot ETPs.
This underscores the growing importance of secure and compliant solutions such as fully segregated assets and bankruptcy remote environment to address concerns, mitigate risk associated with insolvency and build trust in the evolving digital asset landscape.
What do Digital Asset Custodians do?
Qualified digital asset custodians are specialized service providers with deep asset protection expertise, offering secure storage and management solutions for digital assets. Acting as trusted third parties, they safeguard assets against theft, cyberattacks, and operational risks, while ensuring compliance with regulatory standards.
Why Security Matters More Than Ever
Digital assets are attractive targets for cyber threats due to its “online” nature. Many institutions choose to self-custody their digital assets, allocating their assets through hot wallets and hardware wallets such as Ledger as their custodial setup, which can bring benefits in efficiency in operations.
However, simplistic custodial procedures without proper security and compliance frameworks would expose institutions to risks of irreparable financial and reputational damage. As institutional adoption in digital assets increase, investors and clients of financial institutions become increasingly educated on how their assets should be protected with minimal counterparty risk.
Qualified custodians such as Rakkar, mitigate these risks by employing state-of-the-art security measures, such as:
- MPC-CMP wallets with hardware isolation
- Fully segregated & bankruptcy remote accounts and vaults
- Multi-layered security infrastructure certified with ISO27001, SOC 1 and SOC 2 attestations
- Governance features such as address whitelisting, user roles, quorums
- Insured for additional protection
Key Benefits of Digital Asset Custodians for Institutions
1. Unmatched Security
Digital asset custodians such as Rakkar leverage cutting-edge technologies such as MPC-CMP Technology to decentralize private keys ensuring no single party has complete access to the key.
2. Regulatory compliance
Both institutions and custodians often operate in heavily regulated environments. Although regulatory requirements differ across jurisdictions, custodians simplify this complexity for institutions by adhering and layering the requirements for compliance into their services to provide improved operational efficiency and peace of mind to institutional clients.
3. Operational Efficiency
Managing digital assets independently can be resource-intensive and proper governance becomes a key challenge. Custodians streamline processes such as transaction approvals, user roles, whitelisting, and automated reports such as Proof of Assets Reports, enabling institutions to focus on the bigger picture.
4. Insurance Coverage
Leading custodians offer insurance coverage for assets under custody, adding a layer of reassurance against unforeseen risks. For instance, Rakkar provides comprehensive insurance for our client's assets for its full lifecycle, ensuring an additional assurance for its clients.
5. Broad Asset Support
The digital asset ecosystem spans cryptocurrencies, stablecoins, NFTs, and tokenized assets. Rakkar supports over 40+ chains including private and public chains, ensuring unmatched accessibility for institutional portfolios.
How Rakkar Empower Institutional with Confidence
As Asia’s leading qualified digital asset custodian, Rakkar sets the benchmark for security, efficiency, and operational excellence. With certification and attestations such as ISO 27001, SOC 1 & SOC 2, Rakkar offers:
- The fastest SLA in the industry: with a historical record of less than 2 hours cold transaction completion to the industry standard of 24-48 hours.
- Fully segregated accounts: To ensure complete asset integrity.
- Broad asset support: Over 1,000 tokens and 40+ chains.
- Fully customizable governance controls: Highly customisable to meet each institution and their requirements.
Conclusion
Institutions are increasingly turning to digital asset custodians like Rakkar to secure their investments, comply with regulations, and streamline operations. As digital assets become integral to institutional portfolios, digital asset custodians will remain indispensable in building trust and enabling seamless management.
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