Why Regulated Custody Solutions Are Better Solutions for Institutional and Professional Traders
2023
As institutional and professional traders continue to enter the crypto market, the importance of secure and regulated custody solutions cannot be overstated.
The traditional finance industry has long relied on trusted third-party custodians to safeguard assets, and the same level of protection is necessary for crypto assets. That's why GCEX has carefully selected regulated custody partners like Komainu and Hex Trust to provide institutional and professional traders with the security and peace of mind they need to operate in the crypto market. The Risks of Self-Custody Crypto assets are unique in that they are stored in digital wallets, which are vulnerable to hacks, thefts, and human error.
While individual investors can choose to self-custody their assets, this approach is risky and can lead to irreparable losses. Hackers have stolen billions of dollars worth of crypto assets from individuals who failed to secure their wallets properly or fell victim to phishing scams. Professional traders cannot afford to take such risks with the funds they manage on behalf of clients. Additionally, institutional and professional traders face regulatory requirements that individual investors do not. Many jurisdictions require financial institutions to use regulated custodians to safeguard client assets. These regulations are designed to protect investors from fraud, theft, and other forms of misconduct, and failure to comply can result in significant fines and legal consequences.
The Benefits of Regulated Custody Solutions
Using regulated custody solutions like Komainu and Hex Trust can provide institutional and professional traders with several benefits. Firstly, these partners have undergone rigorous due diligence and regulatory oversight to ensure that they meet the highest standards of security and compliance. These partners are also equipped with cutting-edge technology to safeguard assets, such as multi-signature wallets, cold storage, and insurance policies.
Secondly, using regulated custody partners allows traders to focus on their core business of managing investments rather than worrying about security and compliance issues. The expertise and experience of these partners can help traders navigate the complex regulatory landscape and ensure that they are in compliance with all applicable laws and regulations.
Thirdly, regulated custody solutions provide transparency and accountability. Institutional and professional traders can access real-time reports and audit trails to monitor their assets and ensure that they are being held in a safe and secure manner. This level of transparency is critical for building trust with clients and regulators alike.
Why Choose GCEX's Regulated Custody Partners?
GCEX has carefully selected its regulated custody partners based on their track record of excellence in the industry. Komainu, for example, is a joint venture between Nomura, Ledger, and CoinShares that offers a secure and compliant custody solution for digital assets. Komainu's state-of-the-art platform offers military-grade security, insurance coverage, and a user-friendly interface that makes it easy for traders to manage their assets.
Hex Trust is another trusted partner of GCEX. Hex Trust is a Hong Kong-based digital asset custodian that offers institutional-grade security, insurance coverage, and regulatory compliance. Hex Trust's platform offers a range of features, including multi-signature wallets, cold storage, and real-time reporting, to provide traders with the highest level of security and transparency.
| Implications | Regulated Custodians |
| Liabilities for assets kept under custody | Regulated Custodians shall be liable at all time for Clients’ assets safeguarded by the Custodian, except for limited exclusion (e.g. fraud perpetrated by the Client) |
| Private Key Backup | Regulated Custodian ensure readily available backups for clients’ private keys, in compliance with regulations (i.e. VARA) |
| Constant Vigilance | Regulated Custodians monitor Client’s transactions and activities. In case of suspicious transactions, a thorough due diligence is conducted forthwith |
| Fork events | Regulated Custodians ensure support to forked assets, in compliance with regulations (i.e. VARA) |
| Security Breach Notifications | Regulated Custodians must notify Clients of any occurred security breach within a short-given timeframe, in compliance with regulations (i.e. VARA) |
Institutional and professional traders require secure and regulated custody solutions to safeguard their clients' assets and comply with regulatory requirements. GCEX's selection of regulated custody partners like Komainu and Hex Trust provide institutional and professional traders with the best solution.
