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Custody of Tokenized Assets

Cus­tody of Tok­enized Assets

Through­out 2019, mul­ti­ple finan­cial reg­u­la­to­ry insti­tu­tions have set new stan­dards and reg­u­la­tions for the tok­eniza­tion of dig­i­tal assets. From issuance to cus­tody and set­tle­ment, tok­eniza­tion has severe­ly increased in investor pro­tec­tion and mar­ket reg­u­la­tions. The new pos­si­bil­i­ties of dig­i­tal­iz­ing phys­i­cal assets, such as art or real estate, still raise ques­tions about the safe­keep­ing of the dig­i­tal­ized asset own­er­ship.

 

How to keep dig­i­tal secu­ri­ties safe

Tok­eniza­tion of art, com­modi­ties or real estate is already a real­i­ty, and its ben­e­fits vast­ly out­weigh its impli­ca­tions. Tok­enized assets are being secure­ly issued, trad­ed and set­tled on a dis­trib­uted ledger. The con­sen­sus mech­a­nism on the dis­trib­uted ledger allows for a high degree of cyber­se­cu­ri­ty mea­sures which pro­tect dig­i­tal assets. Invest­ments into dig­i­tal assets are being stored as tokens in a cold or hot wal­let, which is accessed through a pri­vate key. 

One risk of a token invest­ment is that if the pri­vate key is lost or stolen, the wallet’s assets become inac­ces­si­ble. Anoth­er secu­ri­ty issue involves the use of the hot wal­let, as it is con­nect­ed to the inter­net it is at risk of being hacked. In con­trast, a cold wal­let pro­vides the stor­age of the assets on a phys­i­cal offline piece of hard­ware. The key ben­e­fit of the hot wal­let is the imme­di­ate access to the funds, where­as the cold wal­let can take a sig­nif­i­cant­ly larg­er time for the investor to receive access to their assets. 

Advan­tagesDis­ad­van­tages
Hot Wal­let

imme­di­ate access to tokens

eas­i­er to set up & access

more sus­pectable to hack­ers

Cold Wal­let

most secure option

slow­er in mak­ing trans­ac­tions

 

Prop­er secu­ri­ty mea­sures need to be imple­ment­ed to enhance investor pro­tec­tion. Black Man­ta Cap­i­tal Part­ners pro­vides its investors with a high­er degree of pro­tec­tion as tokens are being issued using the T‑REX stan­dard. Which includes a blockchain based iden­ti­ty man­age­ment sys­tem that is able to secure investors’ keys if lost.