digital asset custody

4 Benefits of Digital Asset Custody Services

As of 2023, there are 420 million global crypto users. And 97% of users are confident that cryptocurrency is a trustworthy source of income.

However, one of the major issues threatening cryptocurrency users is security. Crypto hackers stole billions of dollars worth of cryptocurrencies in 2022. And they’re probably not going to stop anytime soon.

Crypto institutional investors need to consider using a digital asset custody service. This can keep the crypto assets of their clients safe. When the assets are kept safe, the clients will trust the institution more.

These services also offer many other benefits. Read on to learn about nine of them.

  1. Securer Crypto Asset Keys

Many crypto holders use crypto asset keys to protect their investments. These are strings of letters and numbers. They act like passwords that help investors access currencies.

When investors first buy cryptocurrency, they receive both a public and private key. They’ll share the public key with others to buy and sell crypto.

Private Keys Are Secret

However, investors cannot share private keys with anyone. If they did, their cryptocurrency could disappear. The person that received the private key could steal their crypto.

Investors must keep private keys secret. If they do, they should keep their crypto funds secure. But it’s difficult to keep private keys secret.

Private keys are hard to remember and easy to steal. People can hack into computer systems to steal them. They can also swipe physical copies of private keys.

This is why self-custody of private keys can often fail.

Third-Party Custody

Digital asset custody solutions often offer private key storage. Crypto investors can store their private keys with these custodians. These services will then use their superior security expertise to keep these keys safe.

  1. Less Knowledge Required

New crypto investors need to gain a lot of investment knowledge. This helps them compete against other investors. In general, the more knowledge they have, the more likely they are to win.

Security Knowledge Needed

Unfortunately, if they insist on self-custody, they need security knowledge too. If they don’t gain this, they could lose all of their investments. A hacker can take everything away in a second.

They’ll have to spend less time learning about investing as a result. They could lose their competitive edge when it comes to investments. Is this a setback they have to take?

Let Custodians Handle It

Digital asset custody services are security experts. Investors can pay for the costs of these services instead of having to learn about asset security themselves. They can then go back to focusing solely on investment knowledge.

Plus, crypto custodial service workers can have years of security knowledge and experience. This makes them better skilled at security than a beginner. Security amateurs can end up losing a ton of crypto as they learn.

  1. Digital Asset Custody Regulation

One of the benefits of most cryptocurrencies is decentralization. Most cryptocurrencies are not issued or regulated by a central authority. The government cannot interfere with or manipulate this currency.

This benefit becomes a downside when it comes to digital asset custody services. Services offering crypto asset custodial services can get away with not following security regulations. Unaware crypto investors can turn their assets over to bad custodial services and lose everything.

Luckily, this is changing. In addition, the situation isn’t as bad as people may think.

Governmental Regulations

Last year, the Securities and Exchange Commission (SEC) set some new federal regulations in motion. These expanded custody rules include crypto. Digital asset custody services must gain or maintain registration to hold crypto assets.

Companies under these regulations must properly segregate customer assets. They also need to hold these assets in accounts that can protect them. This will keep the assets from disappearing if a company becomes bankrupt or fails in another way.

Look for Certified Custodian Services

There are also many other ways to check a third-party custody service’s trustworthiness. Many financial authorities already regulate crypto custody services. For example, the Colorado Division of Banking regulates the trust company Etana (more on their services here:

In addition, many crypto custody services have certifications. These prove that respected authorities have analyzed and approved these services. Look for these as well as regulatory authorities when you need a digital asset custodian.

  1. More Cost Effective

When crypto investors look at the costs of digital asset management services, they may think self-custody is better. Yet for many investors, the choice is between losing millions of dollars or paying a few simple fees. You probably don’t want to lose those millions.

What types of fees do crypto custodians charge? If you look at the three types of fees, they don’t seem like much in the face of millions.

Types of Fees

The first fee investors will pay may be a set-up fee. Many, but not all, digital asset custodians charge this fee to create an account. You only pay this fee once.

If you want to withdraw currency, you sometimes have to pay a fee. This is usually a minuscule percentage of the amount you withdraw.

Then there’s the yearly fee. This is also often a minuscule percentage of your assets. Most custodians charge less than a single percent of your total assets.

Compare Costs

Furthermore, investors have more than a few asset custodians to choose from. They can easily compare the prices of different services. Then they can choose the custodial service that offers them the best financial deal.

Learn More About Crypto Through Us

If you want to get involved with crypto investment, you need to hire a digital asset custody service. If you don’t, you’re putting your assets at an extreme level of risk.

Are you just getting started with cryptocurrency investment? If so, you may be interested in the many other cryptocurrency articles we offer on this site. Check them out to get highly useful information on investing in this digital asset.