Crypto Long & Short: Redefining the Custody Standard for Banking

In the latest installment of the Crypto Long & Short Newsletter, Sygnum Bank’s Pascal Eberle discusses the evolution of custody standards in the banking sector, emphasizing the shift from traditional asset holding to verifying asset ownership through advanced technologies. He highlights how multi-signature technology (multisig) enhances accountability by allowing clients to hold their own keys, thus distributing control and necessitating multiple approvals for transactions. This transition transforms the custody landscape, moving away from reliance on centralized institutions and legal protections, which often come with trust issues and counterparty risks. The philosophical shift centers on the principle of ‘Don’t trust, verify,’ promoting transparency and real-time monitoring of assets on the blockchain. This new custodial model, characterized by cryptographic accountability, is set to redefine customer expectations and compel banks to adopt more secure, transparent practices. Meanwhile, insights into the broader crypto market reveal a search for leadership as it awaits catalysts for a rally amidst political and regulatory uncertainties.

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