Patrick

Chair

Bitcoin

Security

The cryptocurrency industry has gained a major amount of attention from the global financial giants. As the adoption of Bitcoin continues to grow, the need for secure custody solutions becomes crucial.&nbsp;
In this article, we will jump into the world of crypto custody and explore its various forms. We will see its importance, centralized exchanges <a href="https://news.todayq.com/grayscale-bitcoin-holding-drops-to-292k-amid-etf-struggle/" rel="noopener noreferrer nofollow">Bitcoin holding</a>, self-custody options, and how security is being taken off. Bitcoin Custody 
In the world of intense crypto trading, custody has become important for market safety. However, Bitcoin custody has two primary forms, first is centralized custody and self-custody.&nbsp;
Centralized custody includes entrusting a third party. This can be an exchange or custodian with the responsibility of storing your Bitcoin holdings. On the other hand, self-custody gives powers to individuals to have complete control over their holdings by securing them themselves. Centralized exchanges with custody 
There are many individuals who choose to hold their Bitcoins and other cryptos in centralized exchanges. This is due to convenience and ease of use. These platforms act as custodians and take care of the security and management of your holdings.
However, if you are relying solely on centralized exchanges for custody then keep in mind that there are certain levels of risk involved. As reports suggest, there have been several high-profile exchange hacks that have resulted in high losses for users.&nbsp;
Therefore, it is important to carefully consider the security measures implemented by the exchange before entrusting them with your BTC.
According to reports, these platforms offer the ease of instantly trading with the assets held within their exchange accounts. But this convenience comes at the expense of security and control.&nbsp;
Most of the CEXs do not provide investors with actual ownership over their crypto holdings, as users do not have direct control over their private keys. Instead, they need to rely on the exchange to safeguard their assets. Self-Custody 
Self-custody can also be termed self-storage or cold storage. This offers users complete control over their BTC holdings. By utilizing these wallets users can secure their Bitcoins offline. This includes hardware wallets or paper wallets which reduces the risk of online attacks.&nbsp;
Hardware wallets are physical devices that are designed for storing cryptos and provide an extra layer of security by keeping private keys offline.&nbsp;
On the other hand, Paper wallets involve generating and printing a physical copy of the private keys. However, Self-custody not only cuts the reliance on third parties but also adds to the security of your bitcoin holdings. Security measures to be taken 
Regardless of whether you choose centralized custody or self-custody, implementing robust security measures is essential in safeguarding your Bitcoin. Best practices for securing Bitcoin assets include using strong passwords and two-factor authentication, regularly updating software, utilizing offline storage and air-gapped systems, and having backup and recovery plans in place. Legal aspects 
In the latest bipartisan move, the US House of Representatives voted to overturn the Securities and Exchange Commission’s (SEC) SAB 121. A contentious staff accounting bulletin imposed several restrictions on banks that offer digital asset custody services.&nbsp;
This resolution gained support from twenty-one Democrats. They aligned with Republicans to pass the opinion with 228 votes in favor and 182 against.
SAB 121, mandates listed companies to classify crypto assets as both assets and liabilities on their balance sheets. This move has drawn criticism from the customary treatment of custodial assets.&nbsp;
House Financial Services Committee Chair Patrick McHenry criticized the SEC’s action over Congressional oversight and consultation with prudential regulators in promulgating SAB 121. He cited the absence of public comment opportunities typically afforded under the Administrative Procedure Act (APA).
SEC Commissioner Hester Pierce has previously asserted that SAB 121 fails to safeguard investors adequately. It asserts that banks possess superior expertise, given their custodianship of trillions of dollars in client assets compared to the more modest security resources of crypto-specialists.

Bitcoin custody; How exchanges differ from self storage

Todayq News

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