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Just as safety, privacy, and trust are crucial in traditional banking, the same holds true for licensed crypto banking platforms, which are uniquely positioned to offer custody services. With the MiCAR deadline approaching, crypto exchange wallets and platforms must either secure a license or partner with a licensed entity authorized to safeguard crypto assets—i.e., a crypto custody provider.
What is crypto custody, and what’s the purpose of crypto custody providers?
Crypto custody providers, or digital asset custody providers, are third-party financial entities with the regulatory authority and licensing required to manage crypto assets on behalf of their clients.
Trust and security are at the core of every crypto custody service.
To protect assets from fraud and theft, regulations require custody providers to follow strict KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures to prevent illegal activities and conduct thorough background checks on all individuals.
To ensure accountability, regulatory authorities require custody providers to be financially robust enough to cover potential losses in case of fraud or theft. Additionally, custody providers must comply with data protection regulations to protect user identities.
Why should crypto companies work with crypto custody providers?
The short answer is simple: to stay compliant in a regulation-heavy sector while continuing to scale their business.
The long answer involves multiple reasons, all supporting the point above.
With the MiCAR deadline looming, most companies are not well-positioned to pursue licensing. Securing a license is resource-intensive in terms of capital and overheads, and many businesses prefer to avoid the burden of managing regulatory compliance.
Conversely, digital asset custody providers are licensed to hold their clients’ crypto assets, with robust compliance teams handling all regulatory requirements such as KYC and AML checks. This means crypto companies can allocate their resources elsewhere, avoiding the costs and hassles of compliance.
Moreover, working with crypto custody providers adds an extra layer of security since they are legally authorized to manage end users’ crypto assets and are liable for any potential losses.
Custody providers simplify the complexities of the crypto and regulatory landscape, allowing businesses to focus on building and expanding their product offerings.
It’s a win-win for both parties.
Striga’s Blended Cryptocurrency Custody Solutions for a Compliant Way Forward
With a crypto banking partner like Striga, businesses can launch products and manage digital assets without needing a license. From wallets to centralized and decentralized exchanges and more, Striga, as a custody provider, offers access to various crypto custody solutions with simplified APIs and comprehensive compliance support.
Instead of managing multiple partnerships and expenses, Striga streamlines the process from the very first onboarding call. You can build and launch your product in just six weeks.
Striga Crypto-native Banking as a Service:
Your path to building and launching financial products
Join the financial businesses that use Striga’s cloud platform to delight their customers and launch their own products without the complexities that come when dealing with core banking solutions’ relationships, licensing, compliance and payments methods.
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