The Role of Digital Asset Custodians

Abstract

Cryptocurrencies and blockchain assets have experienced exponential growth, driving demand for professional custodial services to secure holdings. However, legal responsibilities for digital asset custodians remain ambiguous. This study undertakes a comparative analysis of legislative frameworks and case law governing traditional custodians across major jurisdictions including the United States, European Union, United Kingdom, Singapore, Japan and Australia. Gaps are identified around custodian duties, security expectations, liability apportionment, and licensing requirements that heighten risks in this nascent industry. While judiciaries increasingly recognize cryptocurrency as property imposing custodial obligations, bespoke regulatory regimes are urgently needed to codify standards while encouraging sustainable custody services growth. Tailored governance can mitigate cyber, fraud and insolvency risks associated with crypto-asset custodianship through mandatory fiduciary, technology and insurance safeguards. Regulatory harmonization is also required to prevent jurisdictional arbitrage. With balanced oversight models and cross-border coordination, institutional adoption of digital asset custody can accelerate securely.