Sub-custody arrangements involve a primary custodian delegating some of its asset safeguarding responsibilities to a third-party sub-custodian. This practice is common when a custodian needs to hold assets in different geographical regions or requires specialized services. In the digital asset sector, it means a main crypto custodian uses another entity to secure a portion of its clients’ digital holdings. It extends the chain of asset care.
Context
Sub-custody arrangements are a critical aspect of institutional participation in the digital asset market, enabling broader access for traditional financial entities. News often examines the risks and regulatory implications associated with these arrangements, particularly concerning the security protocols and legal liabilities of sub-custodians. Transparency and due diligence regarding sub-custody relationships are paramount for clients and regulators alike, aiming to ensure the safety and accessibility of digital assets.
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