Knowledge Hub
Custody Risk
Safeguarding arrangements can reduce risk, but digital assets remain exposed to operational, cyber and third-party risks.
Digital assets may be held through external custody arrangements designed to segregate customer assets from a service provider's own assets. These structures are intended to provide additional protection.
Even where regulated custodians and safeguarding arrangements are used, risks such as cyber incidents, operational failures, market disruption or misconduct by a third party cannot be eliminated entirely.
Key points to remember
Understand who holds your digital assets and how they are safeguarded.
Segregation and external custody can provide additional protections.
Regulatory oversight reduces, but does not eliminate, custody risk.
Only commit funds that you can afford to lose.