Cracking crypto custody

Breaking down the building blocks of institutional cryptoasset custody

Arun Ghosh

Arun Ghosh

U.S. Leader – Climate Data and Technology, KPMG US

Mike Krajecki

Mike Krajecki

Partner, IT Advisory & Healthcare Innovation, KPMG US

+1 312-665-2919

The business opportunities presented by cryptoasset custody models are significant. The wave of institutions entering and participating in the market need a trusted partner to hold their cryptoassets for safekeeping, minimizing the risk of theft or loss while ensuring they are available and accessible for speedy transactions on blockchain networks.

However, the technical and operational requirements of cryptoasset custody, security and exchange create unique challenges for enterprises and financial services institutions, including both traditional institutions and crypto-native startups.

Many financial sector business and technology leaders are looking to develop capabilities to engage or interact with cryptoassets which requires them to build custody solutions or utilize third-party custody service providers that meet the specific needs of their organization and customers.

That’s where KPMG can help. As adoption of crypto increases, KPMG’s Cryptoasset Services practice helps crypto custody businesses develop a suite of core capabilities which are intended to be secure and compliant to support institutional requirements for engagement in the ecosystem.

Download this paper to learn about the four key building blocks for institutional grade crypto custody that will allow your organization to be best positioned to seize the incredible opportunity in the custody space.

We believe crypto custody capabilities founded on four key building blocks will be best positioned to meet institutional needs and seize the incredible opportunity in the custody space. Whether institutions build custody solutions from scratch, transform existing custody solutions for non-digital assets, or contract with a third-party custody service provider, these are the building blocks business and technology leaders should emphasize as they engage in the crypto custody business.

These are key actions that cryptoasset custodians and aspiring organizations should start doing today to build a sustainable business model in this emerging financial ecosystem.

1. Next-gen security and resilience

  • Design and enhance security operations and controls to provide layered defenses aligned to industry-standard frameworks
  • Incorporate leading cryptographic techniques for cryptoasset security and availability, including multi-sig, sharding and MPC, and dedicated physical hardware (HSMs)
  • Track emerging developments in cryptoasset security and develop the technical operational agility to quickly embrace new innovations

2. Comprehensive compliance

  • Optimize processes through a unified compliance program to comply with existing financial regulations, compliance requirements, and customer commitments
  • Closely monitor regulatory changes across jurisdictions and develop a plan to rationalize future compliance operations with new rules
  • Proactively engage with legislators and regulators to facilitate learning which drives an ecosystem defined by market integrity and investor protection

3. Third-party trust

  • Implement and monitor a control environment to achieve attestation and security standards, including SOC reports, FIPS, NIST, and ENISA
  • Stay abreast of updates to existing security frameworks under consideration by leading standard-setting organizations
  • Proactively seek out independent auditors to help prepare for and execute third-party attestation and certification requirements

4. Value-added custody

  • Develop a robust strategy to efficiently integrate front, middle and back office services into crypto custody capabilities to realize efficiency benefits across traditional silos
  • Launch services that support customers in participating in consensus processes, governance decisions, and other rights afforded to cryptoasset owners
  • Keep pace with rapid technical change and think broadly about how they might drive future revenue opportunities

We’ll explore each building block in the full report.

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