After a long haul of wait, we now have the new advances in custodial solutions in Bitcoin, allowing the larger financial institutions to enter the market. Bitcoin offers a unique advantage of custody, unlike the traditional financial system. Therefore, Bitcoin is more competent than the traditional legacy system. With the advantage of Bitcoin custody services in the financial markets, institutional investors are now looking forward to understanding and counter the unique challenges of the digital assets world. Read further to learn why institutional investors need custodial solutions.
There are two main benefits that institutional investors get with Bitcoin custody solutions. These include:
- Lowered risk.
- Regulatory compliance.
The first thing that happens when you hire custody services is that you sort between entities that store assets and manage them. This separation also lowers the risk that one employee may run away with all the money. Bitcoin custodians are long-established financial institutions with an excellent reputation that serves as a check for them to go against the clients’ interests.
The most prominent regulatory bodies worldwide, like the United States Securities and Exchange Commission (SEC) have issued directives to institutional investors to keep customers’ funds secure with custodial solutions. Frequently, regular custodians are also broker dealers or banks.
Challenges of Bitcoin custody
While custody solutions for traditional currencies were already hard, the concept and process of bitcoins and other digital assets custody is even more complicated. It is challenging for both retail investors and professionals to store Bitcoin securely. Bitcoin assets, like other digital currencies, are bearer assets. This means anyone with the control of the asset is the owner of the asset. Therefore, if you lose your bitcoin assets, you do not have any chances of retrieving back the same, unlike the bank account or credit card transactions that may simply be reversed. Hacking of Bitocin hot wallets is another issue.
The Bitcoin custody services have experts have the experience and skill to deal with all the significant risks. With this knowledge and swift action, they help in the safe storage of customer assets. Learn more reaching out to Wallex Custody.
