Liminal

liminal

The UAE regulators are focused on boosting the local economy by liberalizing the policies to suit the needs of emerging technologies like The move will create high-quality jobs for the local community, provide skill development opportunities, and add to the region's economic growth through operational expenditures and services to the public. The rapid advancements on the policy front will ensure that the UAE is at the forefront of the web3 revolution and stays ahead of its global counterparts. Web3. Not only that, the UAE market is also emerging as a global hub for Web3 innovation, and the Dubai International Finance Center (DIFC) is acting as a fulcrum to strike a fine balance between regulations and the business aspirations of Web3 entrepreneurs. The growing popularity of the UAE as a Web3 hub clearly shows in the statistics released by DIFC. There has been a 23% rise in the companies enrolling at DIFC this year. Out of these, 660 companies are led by fintech innovation. The launch of dirham Stablecoins has been one of the most pivotal use cases for digital assets. Traditionally, the stablecoin landscape has been dominated by US dollar-backed stablecoins such as , , and the recently introduced PYUSD. To gauge their popularity, one only needs to look at the numbers, i.e., the total market cap of stablecoins hovers around (according to DeFi Llama), with USDT leading the way with a commanding . Given its association with the world's most influential currency, the US Dollar. USDT USDC $124.117 billion 67.13% market share , said “As crypto regulations keep developing across more regions, one will see a corresponding growth in the popular use cases. The primary utility of stablecoins lies in their ability to facilitate cross-border payments at an exceptionally low cost. Globally, corporations shuffle approximately $23.5 trillion ( ) across borders each year. The associated transaction costs for these massive sums tally up to a staggering $120 billion annually. Issues like trapped liquidity, delayed settlements, and the need for foreign currency conversions also plague this process. In this context, stablecoins offer a streamlined solution, enabling seamless transactions with unparalleled security and traceability on a distributed ledger technology. These transactions can easily be facilitated through regulated and compliant custody solutions providers”. Manhar Garegrat, Country Head- India and Global Partnerships at Liminal, a wallet infrastructure and custody solutions platform as per JP Morgan's report “the UAE market has already surprised us with its commitment to becoming a leader in the digital assets space, and it is not surprising to see such highly innovative and simple-to-use Web3 products emerging from the nation. The launch of Dirham-backed stablecoin shows that the digital asset market in the region is entering a more mature phase and is ready for the next stage of growth on the back of evolved regulatory frameworks”. Garegrat added that Liminal is keen to build a strong presence in the UAE region and has received in-principle approval from ADGM in Abu Dhabi to provide digital asset custody services to Web3 businesses and institutions. As an active player in the region, Liminal already has a premium clientele and will look to leverage its position further. We are committed to the UAE Web3 growth story and have hired local talent for leadership positions. We will continue to expand our operations across the Middle East.

UAE Emerging as a Global Hub for Web3 Innovation

The blockchain industry is presently witnessing a renaissance. The developments in the world of decentralization are aggressively growing at rates never previously witnessed. At the forefront, the Ethereum protocol leads blockchain innovation, with its recent updates positioning blockchain technology toward mass adoption. triggered new interests and possibilities with the network. The ensuing updates continue to pique user interest thanks to the compelling features they bring. ‘The Merge’ One such update, represented as , brings new horizons to the notion of wallets and asset security. Introduced with the goal of improving user experience while interacting with its dApp ecosystem, EIP-4337 changes how users transact their crypto assets. The update brings Account Abstraction to Ethereum, changing how wallets (or accounts) are utilized. EIP (Ethereum Improvement Proposal)-4337 Reasons Behind Introducing Account Abstraction Account abstraction capabilities introduced by EIP-4337 shifts the need for users to lean on EOAs (Externally Owned Accounts) – a fancy term for traditional cryptocurrency wallets with key pairs – to smart contract wallets. The reason for this move lies in how cryptocurrency wallets function. Essentially, crypto wallets operate with public and private key pairs generated from a mnemonic seed phrase unique to every wallet. Cryptocurrencies held in EOA wallets are transacted by signing transactions with their private keys. Otherwise, the transactions do not go through. Losing your private keys means the cryptocurrency held in the wallet is trapped. The wallet seed can regenerate the lost keys, but it acts as a point of failure if ever accessed by the wrong individuals. That goes for private keys too. So, users resort to storing them on paper or sophisticated air-gapped devices immune from attacks due to them remaining offline. However, such storage leaves users open to losing these credentials for various reasons. Paper wallets are easily prone to damage, and specialized storage devices may exceed the skill levels of users, among other reasons. Consequently, the use of complex cryptography can push assets away from holders. Users who are not adept with cryptocurrency storage and transactions face a hard time using decentralized use cases. Often, expert users, too, confess the complexity. No wonder individuals are not too inclined to jump into the cryptocurrency world – yet. What Is Account Abstraction? Account abstraction does away with the pain points of cryptocurrency storage and transaction. Ethereum users will no longer have to rely on EOA wallets to utilize the network. Instead, the EIP-4337 soft fork lets them store their cryptocurrency on smart contract wallets operating at the protocol level. It introduces the ability for wallets to be programmed to create riveting transactional capabilities. Comparatively, EOA wallets are unidimensional, allowing users to do nothing more than initiate single transactions, one by one. The programmability will allow the new breed of wallets to pack tremendous features, most of which are yet to be imagined. For now, smart contract wallets can implement social measures to recover funds when private keys are lost, native multi-signature configurations, whitelists for trusted wallets, and transaction limits. More innovative developments include payment of gas fees in tokens besides ETH, automated transaction initiation, bundling multiple transactions into one, and on-chain transaction relaying. None of these features are present in EOA wallets. The ease-of-use account abstraction brings even those merely acquainted with cryptocurrency wallets the ability to have an uncomplicated experience. Account abstraction makes total sense for users handling smaller sums. Enterprises, on the other hand, operate with massive amounts of cryptocurrencies and are consequently constantly targeted by cybercriminals. Account Abstraction Does Not Account for Enterprise Asset Security If anything, the crypto sphere witnesses several CeFi and DeFi protocols crumbling due to smart contract bugs and errors. Hundreds of millions are siphoned away effortlessly by cyber criminals. Contract errors are to blame. Relying on smart contract wallets may not be a great idea for enterprises to store large volumes of assets. The added complexities with EOA wallets exist for a reason, especially when private keys are set aside in cold storage. Moreover, additional measures to reclaim funds from smart contract wallets give rise to many more points of attack than before. Increased phishing attempts revolving around the new wallet recovery measures can be expected, causing a surge in cryptocurrency theft. Dealing with several points of failure can be an enterprise’s worst nightmare. Similarly, enterprises interacting with DeFi protocols may be exposed to unknown vulnerabilities because account abstraction allows for automated transactional capabilities. Smart contract security across needs improvement, and entities holding large sums are better off not relying on such conveniences for the time being. DeFi A level of redundancy while interacting with smart contracts and protocols is suggested. While account abstraction also introduces whitelisting of recipient wallets, we are yet to see how emerging vulnerabilities can intervene and disturb such features. Despite the rapid developments, institutions and enterprises must remain conservative about implementing the change. There is a lot on the line, and exploits can lead to loss of trust and permanent reputational damages. What’s needed is a tried and tested solution that brings the best of account abstraction and some more.

EIP-4337 Based Account Abstraction: Why It Won't Work for Institutions

Abstracción de cuenta basada en EIP-4337: por qué no funcionará para las instituciones

Abstraction de compte basée sur EIP-4337 : pourquoi cela ne fonctionnera pas pour les institutions

EIP-4337 आधारित खाता सार: यह संस्थानों के लिए काम क्यों नहीं करेगा

EIP-4337 ベースのアカウント抽象化: 教育機関ではなぜ機能しないのか

Abstração de conta baseada em EIP-4337: por que não funcionará para instituições

Tóm tắt tài khoản dựa trên EIP-4337: Tại sao nó không hoạt động cho các tổ chức

基于 EIP-4337 的账户抽象：为什么它对机构不起作用

This July, India was the center of crypto media attention. This is due to two reasons: the WazirX $230 million hack and new movements in the local crypto regulation landscape. But the basic thesis of why India is important for the global crypto landscape is much simpler. With more than 1.4 billion citizens, India is the country with the biggest population, where crypto regulation and rules for VASPs already exist. There are different numbers describing the number of crypto users in India. KuCoin estimates the number of crypto users in the country at 115 million in 2022 and Tripple A at 97.5 million. Unlike China, India has crypto regulations, which makes crypto exchange legal in the country. Announced upgrades of local regulations may influence the global crypto industry. WazirX hack Unauthorized criminals hacked the multisig wallet belonging to the biggest local exchange, WazirX, on July 18th. The stolen $230 million amounted to approximately 45% of WazirX's reserves. $100 million of it was in Shiba Inu, and $52 mln was in Ethereum. Short notice about the hack was published in the company’s blog. This demonstrates a lack of security in WazirX's tech infrastructure or its crypto custody provider, Liminal. Both sides were quick to blame each other, which seems strange, considering WazirX is the most well-known crypto exchange in India. This occasion also proves that local crypto regulations need to be developed. For instance, in South Korea, such a hack will be impossible - based on local legislation crypto exchanges should store their funds not multisig, but cold wallets. As for the hack itself, it has been linked to hackers from North Korea, according to Elliptic’s investigation. Regulation Updates Bharat Web3 Association (BWA) proposed an initiative to reduce TDS tax from 1% to 0,01%. Despite that this month the Indian government has remained TDS unchanged. This came to light after the publication of the budget with the new composition of the Narendra Modi government. Also this month Economic Affairs Secretary Ajay Seth announced new crypto regulation guidelines.  Based on his speech cryptocurrencies in India are “regulated from the perspective of AML alone”. The secretary claims that “it cannot be beyond that” and the new “policy stance will come out in the discussion paper”. According to his assumption the final document will be published in September. Co-founder of another local crypto exchange CoinDCX Sumit Gupta has appreciated this initiative and сalled the government to work together on the topic. Current Regulation Approach According to local AML/CFT rules crypto entities need to register as Virtual Digital Asset Providers (VDA). Based on press release issued by Finance Ministry 28 entities were registered as VDA providers in the end of 2023 by the local Financial Intelligence Unit. These companies include Binance, Coin DCX, WazirX (Zanmai Labs), Coinswitch and Zebpay. Also the country has taxation procedures for crypto gains - CGT tax (30%) and TDS (1%) for every transaction regardless of its economic profit (or loss). If we talk about the other regulators, the RBI (Indian Central Bank) has probably the most damaging approach towards crypto and marks them as a threat to financial stability. At the same time, the SEBI (local SEC) is also implementing a number of initiatives to legalize crypto trading in the country. What can change? It looks like current issues of crypto regulations in India such as high taxation and WazirX hack, may be compared to the state of crypto regulations in Japan and South Korea several years ago. These countries also had a series of hacks that forced regulators to tighten their approach to funds storage. Also, Japan had a high taxation for crypto entities and individuals, but now it's changing its regulation approach. As I think development of crypto regulations in India may go by the same scenario like in Japan in the field of taxation and customer security. Although India has regulations for crypto exchange, it doesn't have clear regulations for some other type of VASPs including investment activity and crypto derivatives (such as ETFs). May be next year operations with crypto for investment companies will be included in the new crypto regulation framework. This is quite possible based on the current SEBI's approach. Also, no crypto cards are currently issued in India. Based on the RBI's current position, crypto cards may be referred as a threat to financial stability, because they allow crypto payments. It's different in the US and European Union. Crypto card issuers can operate there, and this market is transparent for regulators, business, and customers. Legalizing crypto cards and ETFs in India may take more time than next year. However, in the medium term (next year), the country will likely adopt proper guidelines and licensing procedures for exchanges, custodians, and crypto funds. Conclusion India is now almost as big in crypto as China and one of the fastest growing economies on the planet. So, we will continue to watch closely how the rules for crypto business are changing there. Despite the existing challenges, this jurisdiction has great potential. If you are interested in getting more crypto regulation insights, you can watch the global crypto regulation ratinghere and get updates on my Telegram channel. This July, India was the center of crypto media attention. This is due to two reasons: the WazirX $230 million hack and new movements in the local crypto regulation landscape. But the basic thesis of why India is important for the global crypto landscape is much simpler. With more than 1.4 billion citizens, India is the country with the biggest population, where crypto regulation and rules for VASPs already exist. There are different numbers describing the number of crypto users in India. KuCoin estimates the number of crypto users in the country at 115 million in 2022 and Tripple A at 97.5 million. Unlike China, India has crypto regulations, which makes crypto exchange legal in the country. Announced upgrades of local regulations may influence the global crypto industry. WazirX hack WazirX hack Unauthorized criminals hacked the multisig wallet belonging to the biggest local exchange, WazirX, on July 18th. The stolen $230 million amounted to approximately 45% of WazirX's reserves. $100 million of it was in Shiba Inu, and $52 mln was in Ethereum. Short notice about the hack was published in the company’s blog . company’s blog company’s blog This demonstrates a lack of security in WazirX's tech infrastructure or its crypto custody provider, Liminal. Both sides were quick to blame each other, which seems strange, considering WazirX is the most well-known crypto exchange in India. This occasion also proves that local crypto regulations need to be developed. For instance, in South Korea, such a hack will be impossible - based on local legislation crypto exchanges should store their funds not multisig, but cold wallets. As for the hack itself, it has been linked to hackers from North Korea, according to Elliptic’s investigation . Elliptic’s investigation Elliptic’s investigation Regulation Updates Regulation Updates Bharat Web3 Association (BWA) proposed an initiative to reduce TDS tax from 1% to 0,01%. Despite that this month the Indian government has remained TDS unchanged. This came to light after the publication of the budget with the new composition of the Narendra Modi government. remained remained Also this month Economic Affairs Secretary Ajay Seth announced new crypto regulation guidelines.  Based on his speech cryptocurrencies in India are “regulated from the perspective of AML alone”. The secretary claims that “it cannot be beyond that” and the new “policy stance will come out in the discussion paper”. According to his assumption the final document will be published in September. Co-founder of another local crypto exchange CoinDCX Sumit Gupta has appreciated this initiative and сalled the government to work together on the topic. announced Current Regulation Approach Current Regulation Approach According to local AML/CFT rules crypto entities need to register as Virtual Digital Asset Providers (VDA). Based on press release issued by Finance Ministry 28 entities were registered as VDA providers in the end of 2023 by the local Financial Intelligence Unit. These companies include Binance, Coin DCX, WazirX (Zanmai Labs), Coinswitch and Zebpay. registered Also the country has taxation procedures for crypto gains - CGT tax (30%) and TDS (1%) for every transaction regardless of its economic profit (or loss). If we talk about the other regulators, the RBI (Indian Central Bank) has probably the most damaging approach towards crypto and marks them as a threat to financial stability. At the same time, the SEBI (local SEC) is also implementing a number of initiatives to legalize crypto trading in the country. What can change? What can change? It looks like current issues of crypto regulations in India such as high taxation and WazirX hack, may be compared to the state of crypto regulations in Japan and South Korea several years ago. These countries also had a series of hacks that forced regulators to tighten their approach to funds storage. Also, Japan had a high taxation for crypto entities and individuals, but now it's changing its regulation approach. As I think development of crypto regulations in India may go by the same scenario like in Japan in the field of taxation and customer security. Although India has regulations for crypto exchange, it doesn't have clear regulations for some other type of VASPs including investment activity and crypto derivatives (such as ETFs). May be next year operations with crypto for investment companies will be included in the new crypto regulation framework. This is quite possible based on the current SEBI's approach. Also, no crypto cards are currently issued in India. Based on the RBI's current position, crypto cards may be referred as a threat to financial stability, because they allow crypto payments. It's different in the US and European Union. Crypto card issuers can operate there, and this market is transparent for regulators, business, and customers. Legalizing crypto cards and ETFs in India may take more time than next year. However, in the medium term (next year), the country will likely adopt proper guidelines and licensing procedures for exchanges, custodians, and crypto funds. Conclusion India is now almost as big in crypto as China and one of the fastest growing economies on the planet. So, we will continue to watch closely how the rules for crypto business are changing there. Despite the existing challenges, this jurisdiction has great potential. If you are interested in getting more crypto regulation insights, you can watch the global crypto regulation rating here and get updates on my Telegram channel . here Telegram channel

India: the Biggest Crypto Market Enables New Regulations Soon

ভারত: সবচেয়ে বড় ক্রিপ্টো বাজার শীঘ্রই নতুন নিয়ম চালু করে

Indien: Der größte Kryptomarkt ermöglicht bald neue Vorschriften

India: el mercado criptográfico más grande permitirá nuevas regulaciones pronto

Inde : le plus grand marché de la cryptographie permettra bientôt de nouvelles réglementations

भारत: सबसे बड़ा क्रिप्टो बाज़ार जल्द ही नए नियम लागू करेगा

インド：最大の暗号通貨市場がまもなく新たな規制を導入

인도: 가장 큰 암호화폐 시장이 곧 새로운 규제를 가능하게 합니다

Índia: o maior mercado cripto permite novas regulamentações em breve

Индия: крупнейший рынок криптовалют скоро введет новые правила

Hindistan: En Büyük Kripto Piyasası Yakında Yeni Düzenlemelere İzin Verecek

Ấn Độ: Thị trường tiền điện tử lớn nhất sẽ sớm cho phép các quy định mới

印度：最大的加密货币市场即将实施新法规

LONDON, UK, May 10th, 2024/Chainwire/--Kintsu, a leading innovator in the DeFi space, is thrilled to announce the launch of its highly anticipated Testnet on May 13th. This exclusive event invites a select group, including the Kintsu OGs, to pioneer a new era in liquid staking on the cutting-edge Aleph Zero blockchain. Aleph Zero is a permissionless Layer-1 blockchain that combines a Proof of Stake (PoS) consensus mechanism with a Directed Acyclic Graph (DAG) for scalability, security, and efficiency. Its advanced privacy features include zero-knowledge proofs (ZK-SNARKs) and secure multi-party computation (sMPC) within the Liminal privacy layer. About Kintsu Kintsu aims to reshape the DeFi landscape with its next-generation liquid staking platform, empowering users to stake their assets while maintaining liquidity. By leveraging Aleph Zero’s state-of-the-art security and unparalleled transaction speeds, Kintsu provides unmatched flexibility and efficiency in liquid staking. A recipient of the Aleph Zero Ecosystem Funding Program, Kintsu is recognized as a pioneer within the Aleph Zero, INK, and Substrate ecosystem. With a focus on decentralization, and security, Kintsu aims to redefine liquid staking, providing DeFi users with a efficient, scalable, liquid, and composable staking solution. Key Features of the Kintsu Testnet Exclusive Early Access: A select group, including the Kintsu OGs, will have the opportunity to participate first, offering focused feedback to enhance the platform iteratively.
Seamless Staking Process: Users can stake their tokens with ease and have them allocated among carefully selected validators for optimal security and efficiency.
Innovative Unstaking and Batching Process: Unstaking requests are collected over a 48-hour period before being batched, followed by a standard 14-day unbonding period. Participants can cancel their requests until they are batched.
Claimable Gas Rewards: Following the unbonding period, participants can claim gas rewards from the Liquid Staking Tokens (LSTs) initially escrowed.
Comprehensive Wallet Support: Participants can utilize wallets like Aleph Zero Signer, Nightly, Subwallet, Talisman, and Polkadot{.js}. Hats Finance Audit Competition: Kintsu has partnered with Hats Finance, a decentralized cybersecurity network, to conduct an audit competition on the contracts that will be deployed on the Testnet. The competition features a bounty of $40,000, incentivizing ethical hackers and security experts to identify and report vulnerabilities. This initiative ensures that Kintsu's contracts are thoroughly vetted before their mainnet launch, maintaining the highest security standards as Kintsu pioneers the future of liquid staking. Participation and Feedback: Kintsu invites its community to actively participate in the Testnet, exploring its innovative features and providing crucial feedback. This feedback will play a significant role in enhancing the platform's user experience. Connecting with the Kintsu Community Users can stay updated on the latest developments and engage with other like-minded individuals by joining the Kintsu Discord community and following on Twitter. Insights and feedback from the community are crucial in shaping the future of DeFi. Contact Director of Growth Alexios Konstantinidis Kintsu hello@kintsu.xyz This story was distributed as a release by Chainwire under HackerNoon’s Business Blogging Program. Learn more about the program here. LONDON, UK, May 10th, 2024/Chainwire/--Kintsu, a leading innovator in the DeFi space, is thrilled to announce the launch of its highly anticipated Testnet on May 13th. This exclusive event invites a select group, including the Kintsu OGs, to pioneer a new era in liquid staking on the cutting-edge Aleph Zero blockchain. Aleph Zero is a permissionless Layer-1 blockchain that combines a Proof of Stake (PoS) consensus mechanism with a Directed Acyclic Graph (DAG) for scalability, security, and efficiency. Its advanced privacy features include zero-knowledge proofs (ZK-SNARKs) and secure multi-party computation (sMPC) within the Liminal privacy layer. About Kintsu Kintsu aims to reshape the DeFi landscape with its next-generation liquid staking platform, empowering users to stake their assets while maintaining liquidity. By leveraging Aleph Zero’s state-of-the-art security and unparalleled transaction speeds, Kintsu provides unmatched flexibility and efficiency in liquid staking. A recipient of the Aleph Zero Ecosystem Funding Program, Kintsu is recognized as a pioneer within the Aleph Zero, INK, and Substrate ecosystem. With a focus on decentralization, and security, Kintsu aims to redefine liquid staking, providing DeFi users with a efficient, scalable, liquid, and composable staking solution. Key Features of the Kintsu Testnet Exclusive Early Access: A select group, including the Kintsu OGs, will have the opportunity to participate first, offering focused feedback to enhance the platform iteratively. Seamless Staking Process: Users can stake their tokens with ease and have them allocated among carefully selected validators for optimal security and efficiency. Innovative Unstaking and Batching Process: Unstaking requests are collected over a 48-hour period before being batched, followed by a standard 14-day unbonding period. Participants can cancel their requests until they are batched. Claimable Gas Rewards: Following the unbonding period, participants can claim gas rewards from the Liquid Staking Tokens (LSTs) initially escrowed. Comprehensive Wallet Support: Participants can utilize wallets like Aleph Zero Signer, Nightly, Subwallet, Talisman, and Polkadot{.js}. Exclusive Early Access: A select group, including the Kintsu OGs, will have the opportunity to participate first, offering focused feedback to enhance the platform iteratively. Seamless Staking Process: Users can stake their tokens with ease and have them allocated among carefully selected validators for optimal security and efficiency. Innovative Unstaking and Batching Process: Unstaking requests are collected over a 48-hour period before being batched, followed by a standard 14-day unbonding period. Participants can cancel their requests until they are batched. Claimable Gas Rewards: Following the unbonding period, participants can claim gas rewards from the Liquid Staking Tokens (LSTs) initially escrowed. Comprehensive Wallet Support: Participants can utilize wallets like Aleph Zero Signer, Nightly, Subwallet, Talisman, and Polkadot{.js}. Hats Finance Audit Competition: Kintsu has partnered with Hats Finance, a decentralized cybersecurity network, to conduct an audit competition on the contracts that will be deployed on the Testnet. The competition features a bounty of $40,000, incentivizing ethical hackers and security experts to identify and report vulnerabilities. This initiative ensures that Kintsu's contracts are thoroughly vetted before their mainnet launch, maintaining the highest security standards as Kintsu pioneers the future of liquid staking. Participation and Feedback: Kintsu invites its community to actively participate in the Testnet, exploring its innovative features and providing crucial feedback. This feedback will play a significant role in enhancing the platform's user experience. Connecting with the Kintsu Community Users can stay updated on the latest developments and engage with other like-minded individuals by joining the Kintsu Discord community and following on Twitter. Insights and feedback from the community are crucial in shaping the future of DeFi. Contact Director of Growth Alexios Konstantinidis Kintsu hello@kintsu.xyz This story was distributed as a release by Chainwire under HackerNoon’s Business Blogging Program. Learn more about the program here. This story was distributed as a release by Chainwire under HackerNoon’s Business Blogging Program. Learn more about the program here . here here

Experience The Future Of Liquid Staking: Kintsu Testnet Launches Exclusively On May 13th

The blockchain realm has come a long way since its humble beginnings with the introduction of Bitcoin. Although ambitious, blockchain technology served the simple purpose of holding and transacting value online back in the day. Nevertheless, its potential developed with Ethereum’s deployment—thanks to smart contracts that let developers build any financial use case they wanted, underpinned by blockchain’s benefits. As this technology continues to revolutionize finance and any industry it touches, (Real World Assets) are a new blockchain-based utility holding promising capabilities. Those capabilities will transform how assets are dealt with in the real world by tokenizing and migrating them to blockchain networks. RWAs are essentially blockchain manifestations of tangible and intangible assets like real-estate properties, securities, gaming assets, and many more. RWAs Everything will be tokenized and connected by a blockchain one day. Fred Ehrsam So, digital asset tokenization can encompass all the world’s assets to provide the advantages of blockchain, effectively removing the obsolete processes endured while interacting with them. A Look at Digital Asset Tokenization The relevance of blockchain technology is understood far and wide. Blockchain networks are decentralized ledgers that breed transparency, immutability, and openness. The most popular blockchain application, cryptocurrency, is widely used thanks to said properties. In fact, cryptocurrency has long been an alternative to traditional financial assets and the financial system surrounding those assets due to its underlying properties. However, that does not limit blockchain advantages from being rubbed off on traditional assets. to bring them on-chain for benefits that are not available off-chain. If anything, tokenization has been at the forefront of blockchain trends in one way or the other. The NFT mania saw prominent artists taking their work on-chain as tokenized representations. Tokenization is the gateway Logically, other assets holding value because of their uniqueness, like collectibles, or those that are not interchangeable, like real estate, can be tokenized. While those comprise non-fungible assets, fungible assets, like securities and commodities, can also be taken on-chain. The ability of blockchain to represent any asset can fundamentally transform how RWAs get transacted and everything associated with transacting them. The Benefits of Digital Asset Tokenization Think of how cryptocurrency eliminated the need for third parties to make payments. The results were low transaction fees, fast transaction speeds, and a trustless, transparent infrastructure. Users were able to move away from archaic centralized infrastructures that lacked transparency and were prone to fraud. Tokenization Breeds Low Costs, Control, and Transparency for Users Tokenizing assets on the blockchain brings users the same advantages. Tokenized assets ensure lesser dependency on centralized intermediaries, if not complete independence from them. With that, transacting RWAs like real estate, financial instruments, art, and more on-chain is less expensive, thanks to the absence of administrative costs spent on third parties. Taking assets on-chain also offers holders more control. The assets are linked to their crypto wallets, enabling them to transact with wallets around the globe at any time. The cryptographic security protection of transactions far outweighs traditional security measures, allowing blockchain users to rise over issues like forgeries. Simultaneously, transactions recorded on blockchains are tamper-proof for everyone to see and offer total transparency- thanks to cryptography again. Anyone can check asset flows and track the returns generated by said assets, keeping fraudulent practices at bay. Moreover, blockchain transparency and smart contract innovation allow for proving provenance. Buyers can verify if they are acquiring assets from legitimate counterparties. Everything on the blockchain is verifiable – users can transact objectively based on thorough due diligence rather than placing trust in others and hoping for the best. Onboarding Assets On-Chain Enhances Their Accessibility and Liquidity Beyond that, tokenized assets are very accessible. On-chain versions of traditional assets can easily be bought, sold, and traded worldwide. The reduction in fees and excessive third-party interference alongside simple cross-border transacting capabilities opens the floodgates to counterparties not interested in dealing with the assets through traditional channels. High costs and third-party permission often prevent them from conveniently indulging in off-chain assets. The increased accessibility with tokenized assets even paves the way for increased liquidity. RWAs can be listed across popular exchange platforms, letting interested buyers effortlessly grab them. That shifts the interaction with traditional assets from siloed, centralized environments to on-chain interoperable infrastructure. The result is open access to on-chain versions of the assets and their effortless movement across crypto wallets. Moreover, tokenization allows the fractionalized ownership of on-chain assets, meaning RWAs are purchasable in smaller parts. It presents possibilities like owning fragments of assets that are usually not divisible. Simply put, tokenization lets buyers with lighter wallets acquire fractions of assets that are hard to sell wholly, making illiquid ones easier to trade and sell. Ergo, taking assets on-chain significantly bolsters their liquidity. With tokenization, something like a rare watch can be represented on-chain and divided into thousands of tokens. Interested parties can thus snap up any number of tokens they like, one, a thousand, or anything between and beyond, and expect their value to grow proportionally to their stake in the watch. Therefore, on-chain tokenization enhances liquidity with all kinds of assets, reducing the volatility of their prices and eventually stabilizing markets. Integrating Traditional Assets into DeFi But why stop there? Blockchain technology is known for revolutionizing the financial landscape. Nothing aided that more than DeFi (Decentralized Finance), a subset of finance originating from blockchain technology. Tokenizing traditional assets makes it possible to take them to the DeFi ecosystem, giving rise to innumerable opportunities. RWAs can be utilized as collateral on borrowing protocols, locked in staking pools and yield farms for profits, and traded seamlessly on DEXs (Decentralized Exchanges). The possibilities are endless as the DeFi ecosystem is highly versatile and often leads to new developments. RWAs can inspire a new direction for DeFi, pushing developers to create protocols mirroring real-world use cases and entirely novel ones not conceptualized yet. DeFi’s composability will allow users to extract maximum value from traditional assets like never before. Tapping into capital-efficient applications at various layers and compounding returns with every layer from a single investment can now be imagined. Custodians to Shape the Safe Utilization of Tokenized Digital Assets With all the advantages RWAs bring over traditional asset types, encouraging users to jump into the blockchain realm requires solutions that make using the assets safe and secure. Institutional investors and enterprises wanting to deal with immense RWA liquidity need custody solutions mirroring traditional custodians. Self-storage wallets work for retail investors dealing with smaller asset values. But think of those storing and often moving massive amounts of tokens between DeFi strategies, effecting trades between various wallets, and handling RWAs on behalf of clients by overseeing numerous withdrawal and deposit requests. solutions will ensure institutional-grade security, protecting and easing the transition to using blockchain-based RWAs. Custody platforms have transformed how enterprises deal with digital assets like cryptocurrencies and NFTs and can easily accommodate RWAs. In fact, licensed custody platforms are why trust has returned to the centralized parts of the crypto ecosystem. Digital asset custody With digital asset custodians, big-ticket RWA utilities will experience the same levels of security as their non-tokenized versions in traditional finance. Thanks to the high-level security protocols and MPC wallet (Multi-Party Computation) devices used by custodians to store RWAs, worries of hacks and exploits when using blockchain-based value are no longer relevant. They also make moving assets between storage systems and external wallets highly convenient. Digital asset transfers can become complex due to the various parts of enterprise storage systems. However, top custodians like Anchorage and Liminal merge the efficiency needed to carry out enterprise functions with digital assets, with highly secure storage and transfer capabilities. Digital Asset Tokenization Is on the Way to Becoming Web3’s Biggest Utility, Soon Digital asset tokenization holds the potential to metamorphose traditional finance. It is envisioned to become Web3’s biggest use case by value by bringing trillions of dollars worth of assets into the blockchain ecosystem. No assets are exempt from the revolution as everything can be tokenized into RWAs to benefit from blockchain-based tenets like decentralization, transparency, and openness. A well-established digital asset custody vertical will immediately help onboard large-scale users. What was once an alternative to the traditional financial system now encompasses it to offer the world revolutionary utility. Diving into the blockchain and Web3 ecosystem has never been this interesting.

Digital Asset Custodians: Their Impact On Digital Asset Tokenization

The digital asset industry is not one that is stagnant. Beyond the perennial excitement induced among enthusiasts and users due to the volatile price movements of the assets, the industry is no stranger to eventful occurrences. Most recently, the US SEC (Securities and Exchange Commission) approved the issuance of Bitcoin ETFs (Exchange Traded Funds) for a handful of prominent asset management and financial services companies. The move pushes the crypto industry towards institutionalization, with multiple jurisdictions worldwide already regulating or working on implementing regulations for all kinds of digital assets beyond Bitcoin. As the industry matures and the innovation evoked by the asset class attracts retail and institutional investors alike, its institutionalization is the only logical step ahead. The Good Comes with the Bad – Still, the Industry Grows Beyond those desired happenings, the industry has also been prone to setbacks. For example, the recent Binance debacle saw the company shelling out over due to its negligence in reporting and preventing transactions serving money laundering. Another example is the infamous that led to collective losses in the billions for crypto users due to the blatant mismanagement of funds. $4 billion in fines FTX saga Regulations will ensure such failures do not occur, keeping digital asset investors and users safe from untoward incidents. Nevertheless, despite the setbacks, the development of innovative products from this space remains strong. Digital assets, alongside a vibrant DeFi ecosystem and robust centralized platforms offering asset storage and exchange activities, among others, are booming. Family Offices Are Showing Unwavering Interest in Digital Assets A rapidly evolving digital asset industry is witnessing massive influxes of funds, now more than ever. With the capabilities it offers to build massive wealth and regulatory perceptions shifting towards the positive, one group of investors flocking to the ecosystem is family offices. Servicing HNWIs (High Net Worth Individuals) and wealthy families to build and maintain generational wealth, family offices are diversifying investment strategies to accommodate digital assets. However, their entry into the crypto markets should occur with the assistance of platforms specializing in handling the large value they pour into these assets. Family offices must turn to working to safeguard users’ assets from the various elements in the ecosystem that can lead to their loss or theft. digital asset custodians Custodians Make Digital Asset Usage Safe and Convenient for Family Offices In fact, jurisdictions rolling out regulations for the asset class are mandating the usage of licensed custodians while dealing with large amounts of assets. And that is for good reason. For one, self-custody wallets aimed to secure digital assets are a good choice for retail users dealing with less significant amounts. On the other hand, interacting with such assets in the millions of dollars, as family offices do, can be inconvenient and dangerous when using self-custody storage solutions. The chances of losing private keys and having assets worth millions trapped forever are more common than assumed and obviously not ideal. Turning to experienced custodians, like BitGo, Liminal, and Copper, is the best way for family offices to go. These custodians offer the perfect balance of security and convenience that they can ask for. Licensed custodians utilize state-of-the-art asset storage and data transfer infrastructure, ensuring the digital assets they handle remain safe. Hot and cold wallets protected by Multi-Signature and are commonplace with custodians, alongside infosec certifications attesting to their robust infrastructure. MPC (Multi-Party Computation) technology Increased Access to the DeFi Ecosystem Through Custody Platforms By turning to custodians, can stay assured they possess instant access to their assets, overseen by bank-grade storage security. Of course, asset storage is only one aspect of custodian offerings. Custodian platforms also come equipped to let their users indulge in DeFi strategies across various blockchain networks – all from their platform interfaces. family offices With the DeFi ecosystem being one of the most prominent use cases of digital assets, family offices naturally utilize the assets under their management to earn steady passive income. So, family offices can indulge in multichain DeFi ecosystems, purchasing all kinds of tokens to put to work in applications deployed on prominent blockchains from well-known third-party custody platforms. Custodian Insurance Removes All Worries of Dealing with Third Parties While relying on third parties to hold crypto assets can seem daunting, especially when blockchain tenets dictate doing away with intermediaries, reputed custodians bring unfaltering trust. It is so because licensed custodians come insured to protect their users from worst-case scenarios like hacks, exploits, and bankruptcies. Family offices can confidently employ custodians, knowing their value is recoverable through insurance despite losses incurred due to negligence or bad behavior exhibited by custodians. Reputed Custodians Uphold Compliance Even for Their Clients Numerous jurisdictions with established digital asset regulations enforce insurance on custodians to safeguard investors. They also enforce AML (Anti-Money Laundering) and CFT (Countering the Financing of Terrorism) protocols upon these platforms, which is a need in the digital asset ecosystem. Such protocols prevent family offices from accidentally indulging in prohibited tokens like privacy coins and interacting with sanctioned wallets linked with illicit activities. Tapping into custody services can make sure family offices remain within legal bounds and do not have their operations, funds, and investments jeopardized. Likewise, custodians can even effect good behavior among family offices, mainly multi-family offices handling investments for multiple HNWIs and families. This type of family office is operated by third parties, rather than the traditional single-family office set up and controlled by HNWIs or families themselves. Most jurisdictions have lax regulations over family offices, meaning the clients of multi-family offices will find their value at risk if the third parties misappropriate said value. Custodians storing end of such offices are mandated to track and report suspicious movements of funds by regulators. client digital assets on behalf Malicious activity can easily be detectable when huge sums are misused, protecting investors from bad actors. Thereby, custodians offer a layer of transparency and accountability. Multi-family offices looking to increase their credibility with end clients interested in digital assets must employ custodians. Custody Solutions Are a Necessity for Crypto-Inclined Family Offices Digital asset adoption is in full swing as investors turn to the asset type and the innovative products it is central to. Family offices are the same as these assets, as they have shown their ability to steadily bring returns that magnify wealth, often more effectively than traditional assets. As they take a more influential place in the portfolios of HNWIs and wealthy families, custodians can help alleviate the issues with handling them. Thus, family offices should consider custody-related solutions to traverse the while making the most out of the novel financial system. digital asset landscape securely and conveniently

Why Family Offices Should Care About Digital Asset Custody

The introduction of blockchain technology brought a novel way to conduct financial transactions. Absolutely trustless, Bitcoin and other removed the need for users to rely on trusted third parties to send and receive money. However, that is limited to peer-to-peer transactions. decentralized digital assets Centralized institutions, like the ones in traditional finance, mushroomed to offer utility and convenience that otherwise don’t exist with self-custody and peer-to-peer transacting. Today, the Web3 industry comprises several centralized entities operating alongside decentralized implementations to provide users with a burgeoning ecosystem of finance and tokenized use cases. However, that poses critical challenges. The Woes of the Web3 Ecosystem Trusting institutions to hold and transact user value can lead to bad behavior propelled by the selfish motives of those operating said institutions. Due to that, many – institutional and retail – have their assets stolen. Look no further than the to know how things can go very wrong. Web3 users FTX fiasco The story does not change with any other centralized enterprise that looted its customers. Money-hungry founders adopt corrupt governance practices to part clients from their assets. The growing adoption of the asset type creates a massive need for honest governance practices. Decentralized Web3 protocols also face their own threats, with hackers looking to exploit the large amounts of liquidity they manage. Many protocols have fallen victim to cybercriminals attacking their storages and transactions to walk away with tremendous value. Regardless, the issues faced by centralized and decentralized Web3 platforms are beatable. And what is better than using technology to combat the issues faced by technological advancements that are blockchain and digital assets? Multi-Party Computation (MPC) technology has become the answer to governance-related issues in the centralized and decentralized parts of the Web3 ecosystem. As MPC-based wallets get integrated into the asset storage infrastructures of centralized and decentralized platforms, the ecosystem is moving towards secure, efficient, and simplified institutional governance. The Governance Dilemma in Web3 The governance problems faced by digital asset institutions are nothing new. In fact, the issue of institutions and enterprises behaving poorly with user assets has remained a recurring theme throughout the existence of digital assets. Not using appropriate storage infrastructure, misappropriating funds for self-serving gains, and scamming clients outright have all been repetitive occurrences in the ecosystem. Poor governance in relation to asset storage and access has been why enterprises lose client assets to hackers or decide to steal the value themselves. Web3 protocols operating on decentralized models face governance-related issues as well. The wallets they use for storing and transacting assets and interacting with their user bases are vulnerable to internal and external threats. Like the large amounts of assets stored by institutions, protocol-related wallets attract bad actors in droves. The holes in asset transactions and storage security can allow hackers to have a field day and steal in the millions. If not obvious, such occurrences are related to how the protocols and institutions manage the assets. Relying on traditional single-signature wallets and even multi-signature (multisig) wallets is neither the safest nor the most efficient way to handle them. Single-signature wallets pose the . Essentially, hackers can access the funds stored in a single-signature wallet if they retrieve their private keys. issue of a single point of failure Despite using cold wallets that store private keys offline securely, over the more vulnerable online hot wallets, the threats posed by social engineering and phishing constantly loom. Bad actors can take advantage of the redundancies present with using cold wallets in the enterprise setting to penetrate through their high-level security. Then, there is always the issue of rogue players within the enterprises, taking advantage of the single point of failure possessed by single-signature wallets. How hard is it for an employee or anyone from the top-level management to misappropriate funds from their company’s wallets? All it takes is access to wallet private keys and the motivation to steal. While the most logical approach to evading such issues is using multisig wallets, they are not without their drawbacks. Multisig wallets require multiple keys in an m-of-n configuration to sign a transaction. That means multiple signatures get broadcasted on-chain, and when the required number of signatures are broadcasted, transactions get initiated from the . However, that poses security vulnerabilities. multisig setup Hackers who have narrowed down on protocol- or institution-related wallets can figure out the wallets signing the transaction and the number of keys required to sign any transaction. Over a long enough period, they can theoretically gain access to the needed number of wallet private keys to launch successful attacks. Similarly, corrupt organizational members can retrieve the private key information of their peers to take control of funds and manipulate transactions. Also, several key signing transactions increase transaction fees at the blockchain level. Furthermore, multisig wallets are not interoperable and often just support one chain. So, interacting with assets from different blockchains will require enterprises and projects to utilize multiple multisig setups. Keeping track of all those wallets and spending heavily on the numerous transactional requirements are not feasible. Single- and multi-signature wallets may be ideal for the average retail investor or user. But institutions need wallet solutions that are more secure and efficient without one canceling the other, which is usually a dilemma with anything blockchain-related. Introducing MPC Technology: A Paradigm Shift in Governance MPC technology is nothing new – it has been a staple of cryptography since the ‘80s. With developments in MPC technology and blockchain’s introduction, MPC has integrated into the functioning of digital asset wallets. MPC technology is used to create separate shards of data. These shards, when combined, can compute a specific result. During the computation, no information about any shard is revealed. MPC algorithms are designed to hide the sharded data of users from one another while revealing just the results of computations. Transposing this capability to digital asset wallet functionalities generates possibilities where multiple individuals, again m-of-n, can approve transactions. It might sound like how multisig wallets work, but several differences exist. The major one is MPC wallets not consisting of several private keys like multisig wallets. Instead, they work with one key divided into multiple shards. When all the key shards, or the needed number of shards, initiate a transaction, the algorithm computes the data from the shards to generate a transaction signature. This signature then takes the transaction on-chain for verification. The computation itself is executed off-chain. Thus, hackers cannot learn about the key shards responsible for initiating transactions from MPC wallets by looking at blockchain explorers. This security comes on top of that offered by the multiple key shards needed to initiate transactions. MPC wallets are, thus, highly resilient against cyberattacks. Several MPC wallet providers now also implement key refresh features, which allow MPC wallet users to generate new key shards after every transaction or set intervals. Therefore, it is nearly impossible for cybercriminals to gather information about the needed shards over a long period to make unauthorized transactions. Institutions and protocols relying on MPC wallets for asset storage can avoid cyberattacks better than with other wallet types. Attacks launched by internal threats are obviously also averted. , reigning in the ideal governance measures through distributed access to digital assets in the most secure way. MPC wallets prevent the possibility of initiating corrupt transactions MPC wallets also offer high levels of transparency to enterprises. Those in charge of enterprise storage have access to wallet transaction history, including information about the value transferred and members approving or declining the transfers. Such improvements push MPC wallets above multisig ones despite both wallet types allowing for distributed digital asset transactions. MPC wallets also offer increased efficiency compared to multisig wallets and cold wallets. They transmit a single signature on-chain, making transaction confirmation much faster than confirmation on multisig wallets. Also, their enhanced security allows institution personnel to store the key shards safely online. Because of that, institutions can transact digital assets much faster than cold wallets while achieving similar levels of security. While cold wallets are still the industry standard for concentrated asset storage and can also come in MPC configurations, institutions can utilize hot wallets in MPC configurations for enhanced security while maintaining the efficiency needed to provide instant liquidity for customers. Another advantage of MPC wallets is that they are highly scalable. Say enterprises want to increase or decrease the number of personnel possessing access to their MPC wallets. They can generate or delete additional key shards with ease. Furthermore, MPC wallets are interoperable with most blockchains. So, enterprises and protocols can store several crypto assets in these wallets without maintaining dedicated wallets for each blockchain. The benefits do not stop there. MPC wallets can easily be plugged into platforms, removing the need to rebuild parts of the platforms to accommodate MPC storage. With a long list of advantages, MPC wallets are the logical choice over other wallets for platforms managing multiple wallets in their infrastructures and committing high-value transactions. Their efficiency and scalability are unmatched. MPC Technology in Action: Practical Applications for Institutional Governance MPC wallet providers are making a cutting-edge difference to the dilemma of institutional governance in Web3. Let’s look at some wallet providers and custodians providing the best MPC solutions. Fireblocks Fireblocks is an industry-leading custodian known to address all kinds of digital asset storage needs. Their non-custodial MPC wallet solution is one of the easiest to integrate into applications and platforms. It operates with the natively developed MPC-CMP algorithm – a leading innovation in MPC-based asset storage. The algorithm is open-source and can be audited before implementation. Fireblock’s MPC offerings are compatible with 50+ blockchains and hundreds, if not thousands, of tokens. Signing transactions occur with some of the fastest speeds while using Fireblock’s MPC wallets. These capabilities have let the custodian process transactions collectively, moving over $4 trillion. Liminal Custody Liminal is a fairly new entrant in the segment but is witnessing rapid adoption. Over fifty crypto enterprises use its services, including banking-grade MPC storage solutions. It also boasts more than $550 million worth of assets under secure storage and has processed transactions collectively worth over $6000 million through its custody solutions. Liminal has achieved such feats by making the most difference in the MPC wallet segment with its increased security protocols. digital asset custody That involves enterprises setting up measures like transaction limits and whitelisting receiver wallet addresses. These processes occur through ceremonies where enterprise personnel accept or decline wallets during the whitelisting process and set limits on transaction values. Through truly distributed governance, Liminal’s MPC wallets transform institutional governance and set the benchmark for Web3. Blockdaemon Blockdaemon – one of the best-known MPC wallet providers, has offered such solutions since 2018. Interestingly, the company is the first to issue MPC-based custody solutions. Not surprisingly, its MPC wallet solutions are some of the most widely used today. Several crypto enterprises and traditional finance institutions rely on its digital asset storage offerings. The wallet provider’s solutions come fortified by its “Advanced MPC” technology, a self-developed MPC module securing wallets on multiple levels. Like the other entrants here, Blockdaemon’s wallets are secured through distributed signing capabilities by dividing private keys into shards. However, what makes them highly interesting is the use of MPC technology for transaction-related policies. Blockdaemon uses cryptography to store policy-related information with key shards. Policies are, thus, merged with the key shards, making transaction manipulation highly unlikely. Therefore, transactions are secured by MPC technology at two layers, bringing increased security and good governance. These industry innovators offer solutions embedded with to take institutional, enterprise, and protocol custody-related governance to the next level. Despite the more touted benefits of distributed and secure access and storage of assets, MPC wallets bring other benefits like accountability and transparency to governance trails. So, whether it is an enterprise or a web3 protocol, permitted stakeholders always know how funds are accessed and utilized. MPC technology The Future of Institutional Governance with MPC Technology There is no doubt that MPC technology is spearheading the much-needed transformation in institutional governance that Web3 requires. By merging security, efficiency, and distributed access, MPC wallets avert major issues with the concentrated asset storage of enterprises and protocols. The entire ecosystem can rest easy now that their assets are stored much safer against cybercriminals and internal exploits. With that level of safety, more institutional investors will begin interacting with digital assets. The enormous value they pump into the ecosystem will remain secured by the enterprises of their choice. Of course, the safety will also extend to Web3 protocols. MPC wallets handling their massive liquidity will come set with predetermined parameters and distributed signing to ensure only correct transactions occur. DAOs will also move to implement MPC wallets if they are not already. All aspects of the will undoubtedly benefit from MPC technology. With calls for increased security, transparency, and efficient governance practices from user communities and regulators, MPC wallets hold the potential to fill all existing gaps. Web3 ecosystem Conclusion Web3 platforms have always had evident governance and security problems. They mainly stem from how the platforms store digital assets. MPC technology’s integration in asset storage infrastructure addresses the related governance issues and improves security and efficiency in handling large amounts of liquidity. Thus, it is important to understand how MPC technology plays a role in making the ecosystem better. Web3 enterprises must adapt to the changing times to meet the desires of users and lawmakers, and integrating MPC wallets into asset storage infrastructures will help them do that.

How MPC Technology is Simplifying Institutional Governance

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The blockchain ethos of the self-custody of digital assets remains relevant over a decade after the creation of Bitcoin in 2009. Numerous scams later, users at their receiving end get suggested to hold on to the keys that provide access to their coins and tokens. While that is the safest way to go, many users, especially institutional investors and enterprises, frequently transacting tremendous amounts of digital assets prefer third parties handling their value. The reasons for delegating the keys to third parties are manifold, with convenience being the frontrunner. While many have burnt their hands seeking convenience, relying on regulated, trustworthy custodians is the way to go. Activities like trading or running crypto-native enterprises benefit from the convenience engendered by custodians. The Issues Relevant to The Digital Asset Custody Landscape in the Past The issue, however, has been safety. The custody of digital assets has had no regulatory directives until recently, thus leaving safeguarding assets to enterprises operating conflicting verticals and not possessing the right capabilities. For a long time, crypto exchanges and other crypto enterprises offered custody services. However, such enterprises would also be involved in profit-generation activities like lending and investing with their own assets and portfolios. Without adequate regulations, some of these without the knowledge of their users. enterprises decided to hypothecate their user assets in risky strategies Such activities are a big no-no as user-deposited assets must never get comingled with enterprise profit-generation activities. The assets must remain in safe storage so the enterprises can honor all their user withdrawals simultaneously, preventing runs. In fact, many enterprises lost the assets they held on behalf of their users due to the strategies they indulged in going bust, leading to bankruptcies and causing their users to wave goodbye to their entrusted assets forever. Thus, digital asset users relying on third-party custody were at the losing end in the past. However, with growing awareness about such instances and regulatory entrance into the industry in various jurisdictions, third-party custody of assets is being done right. Custody services now offer adequate safety and convenience to those who do not want to manage their crypto holdings themselves. The Revival of the Custody Markets and Its Reasons The TradFi world has operated with third-party custodians for decades and proved that regulations and controls can, in fact, offer tremendous amounts of safety and let enterprises and investors conduct their activities with ease. The digital asset sector is no different. Some of the industry’s top custodians have operated honestly through their long tenures, and their users can attest to this fact. With regulations, many are implementing TradFi-like systems. Those in jurisdictions with no digital asset regulations are still following global regulatory trends to offer nothing but the best to their clients. A common trait with regulation-oriented custodians is that they do not operate verticals other than safeguarding user assets. That is what TradFi regulations have directed custodians to do for decades. With crypto regulations bringing the same dictates, users can know their assets are protected. The regulations discourage custodians from operating conflicting verticals and require them to maintain transparency with their regulators and get insured. Such requirements provide levels of . Custodian wrongdoings are identifiable from the get-go and can get nipped in the bud. safety that mirror the self-custody of assets Moreover, users can stay assured that their assets are always accessible, even during calamities like custodian bankruptcies and losses to hacks and thefts. Custodian insurance enables users to reclaim their assets, moving them away from third-party risks. What Can Be Expected by 2030 With that, many users have already begun using third-party digital asset custodians in droves. 2022 was a great year to be in the custody business, despite all the commotion in the crypto markets due to failing projects, lack of controls implemented by top exchanges, hacks, and a persisting bear market. The , showing the interest many digital asset users possess in trustworthy custody services. market size of crypto custodians rose to a whopping $447.9 billion While that is just the beginning, the digital asset custody market is set to rise at a CAGR (compounded annual growth rate) of 23.65%, taking its market size to $1.6 trillion by 2028 and closer to $2 trillion by 2030. The projection comes from a recent Proficient Markets Insight report that shines a light on digital asset custody usage. It includes various market segmentations of the digital asset custody landscape, like custody types, regions, industries, and custodians. The Custodians Enriching the Digital Asset Custody Market The data from the segmentations all point to one thing – burgeoning institutional interest in the digital asset ecosystem, with custodians providing the safety checks they need. While several custodians operate in the industry, a few dominate the markets thanks to the trust they have built over the years and the features they provide. Coinbase Custody Coinbase, as an entity, offers more than just its popular exchange service. Its custody service is one of the industry’s most trusted, with the company maintaining adequate controls to prevent the intermingling of user-stored assets with its other verticals. Its services are licensed by the New York State Department of Financial Services, a regulator known to enforce the most stringent checks before approving licenses to applicants. Resultingly, Coinbase Custody possesses $128 billion in AUM (assets under management), handing it the lion’s share of the industry’s assets under custody. Coinbase lets its users custody assets in its ‘Vault Storage’, a proprietary digital asset storage solution amalgamating the security of offline, cold wallets with MPC (multi-party computation) or MultiSig capabilities. The solution also addresses redundancies with and effortless integration of team members to access enterprise wallets and their contents. The features are usable through the platform’s intuitive dashboard. high levels of asset storage security by providing easy-to-use workflows Furthermore, Coinbase Custody supports 400+ assets, which users can use in activities like staking, lending, and DeFi yield generation right from the platform. Users utilizing its custody and allied offerings have their assets in storage insured by up to $350 million, ensuring they are protected when undue situations occur. BitGo Another massive player, BitGo, is a runner-up to Coinbase Custody in the custodian market share, with over $90 billion in AUM. The custodian opened its doors in 2013 and has remained a household name in the industry thanks to its efforts in securely storing its clients’ assets. Like Coinbase Custody, BitGo, too, is licensed by the New York State Department of Financial Services. The platform utilizes computational consensus for its wallets’ functioning, meaning users store their assets in cold storage, with its wallets configured with MPC or MultiSig setups. BitGo’s custody solutions let users tap into profits through staking, lending, DeFi, and other activities with their assets in storage. Furthermore, BitGo lets institutions and enterprises employ its custody services by harnessing its wallet-as-a-service (WaaS) offering, enabling the ventures to store assets by simply connecting to its APIs. There is no need for complex coding to utilize its WaaS application – convenient drag-and-drop capabilities allow users to integrate BitGo offerings into their workflows smoothly. The custodian lets users store over 600 digital asset types from multiple blockchains, protecting their deposits with insurance of up to $250 million. Also, users can utilize their funds from BitGo’s custody in various applications, similar to what Coinbase Custody provides, like staking, lending, and DeFi yield generation. Newer Custodians Look to Take the Reins of the Growing Markets While several more established digital asset custody providers exist, including famous TradFi banks like BNY Mellon, the crypto ecosystem is witnessing new names filling the increasing demand for custody services. These new entrants give established players a run for their money, offering highly secure storage facilities bolstered by state-of-the-art technologies to introduce additional layers of security and convenience. Liminal Custody Solutions Birthed in 2021, Liminal is creating bigger waves than any competitor recently entering the custody landscape. The custody service provider offers various banking-grade digital asset storage options to institutions and enterprises exclusively, making it an all-encompassing solution for the crypto ecosystem. To that end, the platform has grown to safeguard digital assets worth over $600 million in its short time here. Keeping in line with the secureness offered by the top players, Liminal utilizes MPC and MultiSig technologies to fortify asset storage in its wallets. The platform offers a range of custody solutions, comprising custodial cold and hot wallets, self-custody solutions, and business solutions like wallet infrastructures and white-label offerings. Moreover, Liminal also provides an exhaustive suite of integrations like an automation engine, firewall configuration, compliance checks, and DeFi connectivity at no extra cost. Liminal brings algorithmic capabilities to the asset storage and transaction processes, offering equal parts convenience and security. Zodia Custody Zodia Custody, the Standard Chartered and Northern Trust developed and owned digital asset custodian, represents the surging institutional interest in digital assets. The custody service began operations in 2020, with the TradFi heavyweights entering the digital asset space to facilitate safeguarding digital assets for their client bases interested in interacting with tokenized value. Like the other custodians, Zodia Custody utilizes the much-needed MPC and MultiSig technologies to safeguard digital assets for users. The custodian has the advantage of its parent companies originating from the banking sector, implementing multiple hardware security modules (HSMs) from the TradFi banking world. Also, Zodia Custody is licensed across multiple countries – the UK, Ireland, and Luxembourg, ensuring its dedication to providing banking-grade custody services. While that is already evident due to the companies responsible for its genesis, and convenience to institutions utilizing its services. the custodian takes all the steps needed to provide banking-level safety Its efforts materialize as insurance coverage for stored assets, secure and quick transaction settlements, and yield generation capabilities through staking integrations. Conclusion As custody requirements become more pronounced with evolving regulations and institutional entrance into the ecosystem, established and recently developed solutions will witness massive growth. As we move closer to 2030, the industry can expect a surge in new custodians that bring cutting-edge developments to offer the highest levels of security to digital asset storage.

Future of Digital Asset Custody Market by Size and Valuation in 2030

The crypto market is driven by multiple factors and the global geo-political situation is one of them. The Israel-Hamas conflict is having a ripple effect on the financial markets around the globe. Last month, the on how Hamas has used to finance its surprise attack on Israel. , the Israeli government said it had frozen crypto accounts associated with groups like Hamas, the Palestinian Islamic Jihad (PIJ), and others. The also as the market braces for the spread of the conflict. Wall Street Journal reported cryptocurrency Two days later Coin Desk said that Bitcoin prices were likely to fall , Country Head- India and Global Partnerships at , a wallet infrastructure and custody solutions platform, says that since the start of the Israel-Hamas conflict, we have not witnessed any significant fluctuation in the prices of digital assets but things may look different in the short to mid-term. Manhar Garegret Liminal Israel is an active player in crypto mining and any disruption in the mining process may result in a sharp rise in Bitcoin hash rate. Any increase in BTC hash rate could have a direct impact on its price in the short term Manhar Garegret, Country Head- India and Global Partnerships at Liminal “Israel is an active player in crypto mining and any disruption in the mining process may result in a sharp rise in Bitcoin hash rate. Any increase in hash rate could have a direct impact on its price in the short term. BTC “Furthermore, in the case of the Israel-Hamas conflict, if it contributes to a broader sense of global uncertainty, it could potentially drive some investors towards assets like Bitcoin, which is often referred to as “digital gold” and is considered by some as a store of value in times of economic uncertainty. Outside of crypto markets, what was more notable though, was that the showcased the ability of intelligence agencies to identify and restrict terrorist-owned digital asset wallets. Israel-Hamas conflict “By using Blockchain analysis Israel intelligence agencies showcased a new way of crippling the terrorist by cutting off their funding resources. Hamas terrorists launched campaigns on social media to raise funds through crypto and Israel, known for its tech expertise, blocked the crypto accounts used for Hamas funding. The accounts used for illicit activities were easily identified with the help of support from popular exchanges like Binance and immediate action was taken by law enforcement agencies resulting in one of the biggest financial assaults on Hamas terrorists,” says Garegret. , CEO of India’s second longest-running digital asset exchange, observes that unless the situation deescalates, the geo-political uncertainty may have a ripple effect on global financial markets. Shivam Thakral BuyUcoin , The crypto market slipped by 0.5% and currently stands at $1.05 trillion while BTC lost its key support and slipped below the $27,000 mark for the first time this month. The geo-political uncertainty may have a ripple effect on global financial markets and this may continue till Israel-Hamas decide to deescalate the situation Shivam Thakral, CEO of BuyUcoin “The overall crypto market is witnessing a downward trend as Israel-Hamas conflict intensified on Tuesday. The crypto market slipped by 0.5% and currently stands at $1.05 trillion while BTC lost its key support and slipped below the $27,000 mark for the first time this month. The geo-political uncertainty may have a ripple effect on global financial markets and this may continue till Israel-Hamas decide to deescalate the situation,” he says. Cryptocurrency stalwarts like Bitcoin, Ethereum, and Dogecoin already amid the ongoing Israel-Hamas conflict. This event has brought in geopolitical risk into an already fragile financial market that’s struggling with inflation and surging interest rates. experienced a decline This article was originally published by on Navanwita Bora Sachdev The Tech Panda.

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