Priority Token Guide to an STO: Custodian Solutions

Priority Token Guide to an STO: Custodian Solutions

If you are not new to the financial world terms, you are already familiar with the idea of custodianship. A custodian is a third party that holds the investors’ securities for safekeeping to eliminate, or at least minimize, the risk of fraud or failure.

 

But why are we even talking about custody with respect to crypto and blockchain industry, if cryptocurrencies and tokens imply self-custody? No more intermediaries, no more banks, no more qualified brokers or custodians – this is what cryptocurrency and blockchain are all about, aren’t they?

 

However, self-custody entails certain risks, and they tend to have a direct correlation with the amount of funding raised through an ICO/STO. Moreover, experts keep saying that the long-overdue introduction of custodianship will break new ground in the crypto and blockchain industry. Many believe that it was mostly the lack of custodianship that kept institutional investors out of the Initial Coin Offering/ Security Token Offering market. The emergence of reliable and legally compliant custodians will initiate the entry of institutional capital into the industry.

 

Why Traditional Solutions Don’t Work

Сustody of traditional assets is an accustomed solution, so why can’t we just customize it to meet the needs of the crypto industry? Unfortunately, this simple and obvious solution wouldn’t work. The thing is, crypto tokens and other forms of digital assets are inherently different from traditional assets. That’s why custody companies started to develop new services to respond to this new necessity on the market. On the other side, crypto market players began exploring the new field and presented their own custodianship solutions.

Why Your STO Might Need a Custodian

Here are some reasons why your Security Token Offering might be in need of a digital assets custodian.

  1. To improve security.
  2. To gain trust and credibility.
  3. To meet the legal requirements (in some jurisdictions custodian service is obligatory).
  4. To ensure the fulfillment of the project’s roadmap.

STO Custody Services

  •    Coinbase
  •    PrimeTrust
  •    Monarch
  •    Kingdom Trusts Fidelity Digital Assets
  •    Paladin
  •    BitGo
  •    SIX Digital Exchange
  •    Fidelity Digital Assets
  •    Aegis

This is a list of digital assets custody service providers to start with. Be sure to conduct your own research before entering in any kind of agreement.

What to Consider When Researching A Custodian

  •    Jurisdiction and legal compliance.
  •    Company size and the number of projects/assets under custody.
  •    Data protection and security level.
  •    The minimum/maximum amount for custody.
  •    Costs and fees.
  •    A selection of additional services provided by a custodian.

 

To sum up, digital asset custody services seem to be the missing link the industry has been seeking for. The option to safekeep tokens and other digital assets in a secure environment that is similar to a traditional asset protection model is offering new possibilities both to the investors and project founders.

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