Opportunities in digital assets and digital custody: Tracking the modernisation of standard custody offering

Abstract

Digital assets are a new asset class whose adoption necessitates a transformation of custody similar to the transition from paper-based securities to a fully dematerialised securities system. This paper explores how traditional custodians can manage this transition in a proper way and employ distributed ledger technology to increase the efficiency of their operations and to provide digital asset and traditional services in an integrated way. Starting by describing the status of custody, the paper then describes the opportunities and challenges of blockchain-based digital asset custody and elaborates on the proper ways of integrating the novel platforms and processes in the business model of a traditional custodian. On this basis, a framework is developed for a future integrated custody service.