Why Self-Custody is the Key to Secure Settlements

May 27, 2024
3 min

In the world of digital assets, security is a top priority. Given the growing number of financial service providers entering the digital asset market, recognizing the importance of self-custody in achieving secure settlements is crucial.

The act of securing the private key which directly controls your digital assets, rather than relying on third parties as custodians, is known as self-custody. Self-custody offers a range of benefits when it comes to settlement security, primarily through the elimination of any additional counterparty risk. According to DefiLlama, the total value locked (TVL) in DeFi protocols exceeded the $50 billion mark in February 2023 for the first time since November 2022. Therefore, as the market picks up, the need to protect digital assets is on the rise.

Self-custody has several benefits, but the biggest is the elimination of the need for trust in third-party custodians, which lowers the possibility of external hacking, or collusion that could put assets at risk. By holding your own assets, you maintain a higher level of control over those assets, which should translate into greater safety and peace of mind (as long as you do so in a secure way!).

Additionally, self-custody helps ensure the privacy of the owner’s assets, preventing them from being scrutinised by third-party custodians, regulators, or other unauthorized parties. This allows individuals to preserve their financial security and protect their assets from being misused for unlawful purposes.

Furthermore, self-custody reduces counterparty risk by allowing owners to settle transactions directly with each other, without the need for intermediaries. This means that owners can settle transactions quickly, securely, and at a lower cost.

In the digital asset industry, financial service providers face numerous challenges while settling multi-currency fiat and digital assets with their banking partners. These challenges include security, compliance, intermediaries, and counterparty risks. Fortunately, there are solutions available that can address these challenges.

One such solution is a self-custody platform powered by permissioned blockchain technology, which enables direct settlements and reduces the need for intermediaries and counterparty risk. This solution also offers customization of security settings and multi-factor authentication for enhanced security, giving financial service providers control and transparency over their digital assets.

Staying at the forefront of changes in the digital asset industry is crucial, and the self-custody platform providers are continually improving their solutions to keep up with the latest trends in the market and provide their clients with the best possible service. With such solutions available, financial service providers can focus on their core businesses while leaving the challenges of digital asset settlements to the experts.

In conclusion, self-custody is the key to securing settlements in the digital asset market. At io.finnet, we believe that self-custody provides financial service providers with greater security, privacy, and control over their digital assets. Our platform leverages the power of blockchain technology and self-custody to provide financial service providers with a secure, efficient, and cost-effective settlement solution.

We invite you to learn more about our self-custody solution and discover how it can benefit your business. With io.finnet solutions, you can have peace of mind knowing that your assets are safe.