Your Essential Guide to Choosing a Crypto Custodian

April 5, 2021

From MicroStrategy and MassMutual to Tesla and Mastercard, institutional adoption of Bitcoin (BTC) and other digital assets is rising steeply. With more big money flowing into this alternative asset class and major global banks announcing their foray into crypto custodial services, institutional investors now have more choices available than ever–and choosing the right crypto custodian for their needs is vital.

It is not a decision that should be taken lightly. Institutions of all sizes need to carry out due diligence and ask themselves several important questions before entering into a relationship with a crypto custodian. As Digivault launches on EQUOS, we discuss the most important factors to consider when choosing a crypto custodian.

Regulatory Compliance and Credentials

A relationship with a crypto custodian is all about trust. After all, this is the entity that will be protecting your assets, so it is absolutely vital that they can provide solid credentials. Rather than the number of clients they have or even the length of time in the market, ask yourself whether they are regulated and in what jurisdiction. Is it a significant country with a globally respected legal framework?

Is the country’s regulator a FATF member that must comply with the highest standards of AML, KYC, and CTF? What credentials do they have and what guarantees can they offer? These are important questions to ask. If your crypto custodian isn't registered in the jurisdiction in which they operate, they may be operating illegally.

Digivault is a UK-based FCA-registered[1] digital assets custodian and the custodial arm of Diginex, the first company with a digital asset exchange to be listed on Nasdaq. We hold ourselves to the highest standards of security and compliance. We work with one of the most reputable vaulting facilities provider in the world, Malca-Amit, which protects billions of dollars of assets, including diamonds, gold, and fine art.

Technical Expertise

Carrying out a full technical review of a crypto custodian may not be within the reach of every business. This is why there are certain standards in place that your custodian can adhere to that prove their technical expertise. Digivault's architecture has been designed by some of the brightest minds in the business.

Our team of financial experts and technical engineers combine years of experience in building traditional banking infrastructure for global giants such as UBS, JPMorgan, and Deutsche Bank, and in delivering secure IT solutions for the UK's Ministry of Defence. We understand what it takes to keep global financial systems and mission-critical systems up and running at all times because we've built and managed them ourselves.

Digivault is aligned with industry best-practice and government cryptographic standards, FIPS 140-2. We are Cyber Essentials Plus (CE+) accredited and in the process of obtaining ISO 27001 Information Security Management certification. To meet the high standards of institutional clients, our core code has also been subjected to stringent third-party audits and the solutions subjected to rigorous penetration testing.

Level of Customization and Care

With an ever-increasing choice of crypto custodians, it can be tempting to just choose the largest name in the industry. However, remember to consider the unique needs of your business. While larger custodians can almost certainly offer you reputation, credentials, and other guarantees; consider the level of customer service and customization that you need to receive.

Opting for a smaller, bespoke, white-glove custodian may suit your business better, rather like banking with a private bank in which you're not just another number, but instead a highly valued client. Digivault is unwaveringly focused on fostering deep client relations and can extend a superlative level of care and customization to your business.

Retail or Institutional Focused

Many crypto custodial solutions out there were built with the intention of catering to retail investors and are now upgrading their infrastructures to suit the needs of larger institutional investors. With Digivault, it is the other way around. We have specifically built our product with institutional clients in mind–and it can be integrated with their core banking infrastructure easily, if needed.

Our institutional-grade custodial solution has been designed by a team of professionals that speaks your language and understands the needs of large clients, such as banks. We've spent years developing core banking infrastructure, and so are well-versed in both their strenuous internal processes and how institutional risk committees work.

Digivault was not designed by a team of developers with no experience in traditional finance, grasping to understand how financial systems work–we come from the same place as you and we're here to help make your transition into blockchain technology as seamless as possible.

Can You Control Your Own Assets?

Most custodians offer a service–to custody your assets–which means working with a third party to manage your customers’ funds. Digivault offers custom solutions depending on your needs. For smaller and mid-sized institutional investors who want their digital assets stored in high-security diamond and gold-grade vaults, we offer that service to you.

However, the world's largest global custodian banks need to hold the keys to their own assets. This is why Digivault's offering can be white-labeled by institutions and slotted into their core infrastructure, allowing them to be their own custodian and eliminating the need for a third party.

Whatever the needs of your business, Digivault can work with you to provide the best solution–along with the peace of mind of working with a technically robust, regulated, certified, and insured custodian built by experts in the financial and technical spheres, and backed by the Nasdaq-listed EQUOS exchange.

[1] Temporary registration under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 as a cryptoasset business until 9 July 2021, pending the determination of our application by the Financial Conduct Authority. It is imperative that businesses hold this registration in order that they can store client assets on their behalf beyond 9 January 2021.

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