Why Independent, Regulated Third-Party Digital Assets Custodians are Important in Fraud Mitigation Measures
10 Jun 2020 — From Reed Smith LLP’s article, https://lnkd.in/gWyzPTM by Calvin Chan, Hagen Rooke, Nic Seng, Ho Jun Yi, fraud mitigation measures mentioned include:
– Exchangers should consider whether to appoint a specialised third-party custodian
– A robust governance structure that ensures management and access of private keys not to be vested in few individuals
The U.S. Securities and Exchange Commission’s Custody Rule states that advisers that have custody, to maintain client funds and securities with a broker-dealer, bank, or other “qualified custodian.”
According to ASIFMA Best Practices for Digital Asset Exchanges, the use of reputable professional third parties to act as independent custody service providers should be considered.
“What we bring as a custodian is complete neutrality as we are independent. If our customers want to withdraw their assets and transfer them to different exchanges, we can facilitate those processes for them.” – Alexandre Kech, article from Blockchain.News by Matthew Lam