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Digital Asset Security

Estimated reading time: 2 minutes, 44 seconds

Usually, a handful of topics rise to the top in any discussion of digital asset custody. It’s inevitable that security concerns and questions will come up at any conference, seminar or event Kingdom Trust attends. Potential and current crypto investors rightfully want to know how Kingdom Trust’s custody solutions address those key areas.

So, let’s answer a couple of your questions regarding digital asset security.

Storage is perhaps the most important element to cryptocurrency security. “Where and how will it be stored?” is generally among the first questions asked by potential investors.digital currency cryptocurrency

For Kingdom Trust clients, all wallets are multi-authentication cold storage. We also require whitelisted addresses. Clients have 24/7 account access and will receive email notifications when transactions are processed.

Due to our enhanced security, we do not disclose who holds private keys or where they are held. Digital currency transactions on our platform require multiple authenticators and multiple entities. We also monitor and review what user keys have been used and when.

Another question is “What security protocols are in place to protect digital assets?”

First, it’s important to seek the services of an independent, third-party custodian, like Kingdom Trust, well-versed in the custody of digital assets for the top-notch security you seek. A qualified, third-party custodian will be supervised and examined by state or federal regulators. For instance, Kingdom Trust is a qualified custodian under Rule 206(4)-2 of the Investment Advisers Act of 1940 and the Investment Company Act. We’re also a qualified third party under the JOBS Act and Reg CF. As a result, any funds using Kingdom Trust would satisfy the custody rule.

Contrast this with self-custody, where the owner takes responsibility for the digital currency and is, thereby, also responsible for the safekeeping of the assets, underlying keys, passwords and so on. What happens to the assets during a natural disaster, death, or some other loss or destruction of those critical elements? Those are concerns not answered by self-custody—nor are they answered by non-qualified custodians.

Qualified custodians should have a strong disaster recovery program so that, even in the event of a disaster, operations can continue. They should also have a key compromise protocol outlining internal processes for the regeneration of keys and wallets in the event of a key or operator becoming compromised. Also, the firm should have a strong, documented and well-tested cybersecurity policy in place. Kingdom Trust meets all of these security expectations.

Qualified custodians are best equipped to process transactions on behalf of a fund manager or individual investor.

For instance, at Kingdom Trust, all transactions are first verbally verified with the client and cross-referenced with the documented transaction request. We also encrypt end-to-end data through APIs and utilize secure email for various email interactions.

Kingdom Trust’s state-of-the-art storage and security technology make our digital asset custody the leading, most secure solution in the marketplace. But for this reason, Kingdom Trust cannot disclose many of the specifics of its storage and security protocols. In addition, we continually implement additional layers of processing integrity and update our security for the benefit of our clients.

For more on this topic, check out our recent white paper, Kingdom Trust Solidifies the Foundation for Qualified Custody of Digital Assets. Our CEO, Matt Jennings, defines “qualified custody” and outlines why such a large need for it exists in the cryptocurrency market. Download it today for free!

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