The Need for Digital Asset Custodians

July 28, 2023 by
Etana Team

The Need for Digital Asset Custodians
Most people think of cryptocurrency when they think of digital assets. But this misses the bigger picture. Crypto is an essential component of an emerging digitized economy, powered by the blockchain.

Companies and governments are exploring blockchain-based alternatives to traditional solutions. This includes issuing currencies (e.g. stablecoins, CBDCs), verifying identity (decentralized identity or DID), and opening up access to real-world assets (e.g. tokenized real estate).

Consumers in this new digital asset economy stand to benefit from lower costs, faster service, wider opportunities for trading and investing in assets, and ways to keep themselves safe from harm. However, the digital asset world also presents multiple risks.

These risks include rapidly evolving protocols, market volatility, unique points of cybersecurity failure, and regulatory uncertainty. Understanding the technology (e.g. multi-sig, cold storage solutions, and advanced encryption) to guard against these risks is vital.

Digital Asset Custodians are purpose-built for the new era. They have a number of advantages that traditional institutions can't match, including:

  • Specialization: Whereas banks offer a wide range of services from lending to payments, Digital Asset Custodians develop and maintain the domain-specific expertise necessary to manage the complexities of the blockchain.
  • No legacy systems: Custodians such as Etana are designed for the digital age, and are not held back by antiquated, slow-moving systems and the accompanying bureaucracy that is typical in most banks.
  • Agility: Being focused and leaner allows digital asset custodians greater flexibility. This is a necessity to adapt to the constantly shifting sands of web3 - technical, regulatory, and commercial.
  • Scalability: In a borderless digital world, Digital Asset Custodians have a global outlook and are poised for scale. Many traditional banks are geographically focused, and their systems are vulnerable to sudden changes (e.g. rapid growth).

As a regulated digital asset custodian, Etana provides comprehensive services encompassing traditional G10 currencies and a wide array of digital assets (cryptocurrencies, utility tokens, stablecoins and tokenized equity).