AIMA releases new guidelines on custody of digital assets

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Opalesque Industry Update – The Alternative Investment Management Association (AIMA), together with leading digital asset custodians and industry experts, today released a new industry guide to digital asset custody for investors institutional.

The guide has been primarily designed for those seeking the services of a digital asset custodian or, to the extent permitted by law, a custodian infrastructure provider.

The guide provides sound practices and key due diligence considerations for institutional investors determining how to safeguard their digital assets.

It was written by a cross section of practitioners, as digital asset custody is cross-functional in nature, ranging from technologists and cybersecurity professionals to legal and compliance teams.

Co-sponsored by ECI and PwC, the guide was produced with contributions from Albourne Partners, Anchorage Digital, Apex Group, Barclays Investment Bank, Capco, Coinbase, CMS Switzerland, Copper, Dagger Consulting LLC, Digivault, Fidelity Digital Assets, NYDIG, Travers Smith LLP, UI Enlyte and Zodia Custody.

This guide is the initiative of AIMA’s Digital Assets Working Group. This group is a cross-section of approximately 300 senior industry experts, including institutional investors, custodians, exchanges and other service providers. He is responsible for driving AIMA’s regulatory engagement, thought leadership initiatives and operational guidance in the area of ​​digital assets.

How does custody of digital assets work?

The concept of custody of digital assets revolves around the safekeeping of a private key. However, since private keys are used to store, manage and transfer digital assets by the owner and assist in message decryption and transaction authentication, they represent a single point of failure in the system. Therefore, private keys require sophisticated technologies to prevent theft, loss or destruction. It is the control and management of these private keys that gave rise to the frameworks supporting the custody of digital assets as a distinct and specialized service offering.

Although keeping a private key in a safe place is fundamentally a technical need involving specific hygiene protocols, when integrated into a commercial service offering, potential users of this service should consider the conditions under which the service offering is provided, the regulatory framework surrounding the custodial provider, any insurance arrangements required or in place and the legal basis on which the assets are held.

Commenting on the guide, Jack Inglis, CEO of AIMA, said:

“Hedge fund allocations to digital assets continue to gain momentum and AIMA is well placed to assist our members with operational guidance around this growing asset class through our working groups, market research and our Best Practice Guides.This guide to custody of digital assets aims to provide industry guidance and key considerations for institutional investors determining how to safeguard their digital assets.

“My thanks to all of our members who have helped make this an excellent resource for investors.”

Commenting on the guide, Haydn Jones, Director and Senior Blockchain Market Specialist at PwC UK, said:

“This document, authored collectively with input from many leading companies in the cryptocurrency custody industry, represents an accessible guide for those seeking to understand the principles of digital asset custody. With over $100 trillion dollars of traditional assets under management around the world, as allocators seek exposure to alternative markets like crypto and emerging subclasses like NFTs, understanding the fundamentals of safekeeping is paramount. safe.”

Commenting on the guide, Richard Itri, chief innovation officer at ECI, said:

“As investment funds increasingly embrace the use of digital assets, this guide provides an invaluable tool for navigating the use of private keys for secure ownership of digital assets. Technology and Regulations are constantly evolving, but the safekeeping of assets remains vital.Leveraging the insights of many industry experts, this guide works to provide funds the guidance needed to make it easier to understand the relationship between innovation and regulation. ”