Crypto custody rules are regulations governing how digital assets are held and protected on behalf of others. These stipulations aim to safeguard client funds and prevent misuse by establishing standards for security, operational resilience, and segregation of assets. They define the legal and technical obligations for entities that store private keys or manage digital asset accounts for third parties.
Context
The regulatory landscape for crypto custody is rapidly evolving as jurisdictions worldwide seek to bring digital asset service providers under clearer oversight. Key discussions revolve around distinguishing between qualified custodians, self-custody solutions, and the appropriate level of institutional security required for various asset types. Future developments will likely involve greater harmonization of these rules internationally and specialized licensing for custody providers to enhance investor protection and market stability.
The FCA's new consultation mandates full, segregated backing for qualifying stablecoins and non-statutory trusts for custody, fundamentally restructuring UK digital asset risk architecture.
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