Definition ∞ Custody Obligations refer to the legal and operational responsibilities financial institutions or digital asset service providers bear when holding assets on behalf of their clients. These responsibilities typically include safeguarding the assets, maintaining accurate records, preventing unauthorized access, and ensuring compliance with regulatory requirements. For digital assets, these obligations extend to securing private keys and managing cryptographic risks. Adherence to these duties is crucial for client trust and market integrity.
Context ∞ In the cryptocurrency sector, discussions around Custody Obligations are prominent due to the unique technical and security challenges associated with digital assets. News often highlights regulatory efforts to define and enforce these obligations for exchanges and institutional custodians, aiming to protect investors from loss or theft. The development of robust, audited custody solutions is a significant area of focus for institutional adoption of digital assets.
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