Qualified Custodian Requirement

Definition ∞ A qualified custodian requirement mandates that institutions holding digital assets on behalf of clients must use a regulated and secure third-party custodian. This rule aims to protect investor assets by ensuring they are stored with entities meeting specific security, operational, and financial standards. It minimizes the risk of loss, theft, or mismanagement of client funds. This requirement is a significant aspect of institutional adoption.
Context ∞ The qualified custodian requirement is a central theme in crypto news related to institutional investment and regulatory compliance. News reports often discuss how this requirement impacts traditional financial firms seeking to offer digital asset services, necessitating partnerships with specialized crypto custodians. It is a key factor in legitimizing the digital asset market for larger investors and ensuring robust asset protection standards.