On-chain custody refers to the secure management and storage of digital assets directly on a blockchain network, where ownership and control are cryptographically recorded and verifiable. This method often involves smart contracts or multi-signature schemes that dictate how assets can be accessed and transferred. It offers a transparent and auditable record of asset holdings, reducing reliance on centralized third parties for asset safekeeping. Users retain a high degree of control over their assets through their private keys.
Context
The security and operational models of on-chain custody solutions are a constant subject in blockchain security news and institutional discussions. While offering enhanced transparency, the complexity of managing private keys and smart contract risks presents specific challenges. Innovations in self-custody solutions and decentralized custody protocols are gaining prominence, seeking to balance user control with robust security measures for both individual and institutional asset holders.
The shift to public DLT for fund tokenization mandates a critical upgrade to compliance frameworks, requiring systemic integration of on-chain custody and settlement controls.
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