Custody of Client Assets

Definition ∞ Custody of Client Assets involves the holding and safekeeping of digital assets on behalf of clients by a third-party entity. This service ensures the security and accessibility of funds, typically through specialized technological and procedural safeguards. The custodian assumes responsibility for preventing loss, theft, or unauthorized access to these assets. Proper custody arrangements are fundamental for investor protection and institutional participation in the digital asset market.
Context ∞ Regulatory bodies worldwide are intensifying their scrutiny of Custody of Client Assets in the digital asset sector, with a strong emphasis on operational security and segregation of client funds. Recent news frequently addresses new guidelines and enforcement actions related to custodial practices, especially following instances of platform insolvency or security breaches. The ongoing discussion centers on establishing clear standards to mitigate counterparty risk and enhance market integrity.