Custody of Digital Assets: Centralized Safekeeping of Decentralized Assets under the Investment Advisers Act

17 December 2018
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Key takeaways:
  • Custody of digital assets is a significant concern for asset managers and institutional investors.
  • Current methods for the custody of digital assets, generally based on the use of qualified custodians and other requirements under the Investment Advisers Act, can provide significant protections against third-party cyber threats and similar risks.
  • It is not clear, however, whether such methods address concerns arising from potential fraud on the part of an adviser, its employees or representatives, and such methods may not be consistent with the underlying principles of distributed ledger technology.