The Benefits of Digital Asset Custody

Today, digital assets occupy a big part of our day-to-day lives. We view photos and videos online and exchange digital files with our colleagues. Even investments are going digital, with NFTs booming in the past year and the world’s foremost cryptocurrency, Bitcoin, reaching an all-time high of $68,521 just last November.

Bitcoin’s growth in particular is no surprise. This guide to cryptocurrency trends previously predicted that it would grow by 200% this year. So far, it’s exceeding these expectations, with analysts predicting that its value will surpass the six-digit mark this year.

As digital assets continue to enter the mainstream, securing them is now increasingly crucial. One way institutions are doing so is with digital asset custody, which involves third-party services looking after your digital assets for a fee. But why should your organization consider leveraging these services instead of looking after assets on your own? Below are a few benefits to consider.

Simplicity and convenience

As with other tasks that are outsourced, having another party safekeep your digital assets means less work for your organization. Though it’s true that self-custody allows for more control, it involves generating and keeping track of private keys for each asset you own. You’ll need niche technological knowledge not only for setting all this up but also for maintaining the same level of security over time. With third-party custodians, you’ll get the same results without having to lift a finger. This benefit is more pronounced in larger organizations like banking institutions, which usually hold a larger number of digital assets that require more complex processes to be kept safe.

Increased security

While self-custody is a viable option for organizations that have the talent needed to secure digital assets, it’s also more vulnerable to cybersecurity threats. Breaches targeted at businesses occur every 11 seconds on average, and hackers caused a loss of over $10 billion in decentralized finance last year. By hiring third-party custodians, you leverage their security-oriented expertise to your advantage. These firms have the experience needed to more effectively ensure that your digital assets are less likely to be stolen or confiscated by unauthorized individuals or parties. With even the supposedly-unassailable blockchain becoming more susceptible to breaches over time, the increased security digital asset custody provides should not be overlooked.

Reduced risk

Aside from increased security, digital asset custody can also reduce risk in another sense. In our guide on the technology, we mentioned that institutional investment in cryptocurrencies and other digital assets have been especially hindered by the lack of regulation among third-party digital asset custodians. Fortunately, continual mainstream adoption of these assets means vendors now provide more attractive offers for digital asset security. For example, digital asset platform Anchorage recently received a federal banking charter from the US’ Office of the Comptroller of the Currency. In southeast Asia, Atato is one of the only Licensed custodians that received its custody license from the Honk Kong Trust Ordnance. This means they are one of the only firms of their kind to be regulated by an official government agency. Consequently, you can be sure that your assets are safe in the right hands.

A competitive edge

Arguably the most important thing about digital asset custody is that it will put you a step ahead of your competitors. In today’s Digital Age, more consumers are profiting from digital assets. If you cater to individual digital asset investors or find yourself in a position to enter that market, digital asset custody will ensure the quality of your services. Otherwise, your organization can benefit from diversifying your portfolio with a vast array of digital assets — all while simultaneously lowering the risks of your trades. This can help increase the attractiveness of your organization to investors, ensuring long-term growth. Indeed, leveraging digital asset custody is a safe and convenient way to ensure your business thrives moving forward.

Article was specially written for atato.com By Zea Green