Manthan Dave, Co-Founder and Co-CEO of Palisade, joined Keith Black, Managing Director of RIA Channel, to discuss the choices investors have for holding custody of their digital assets.
Investors purchase their first digital assets or cryptocurrencies on a centralized exchange, such as Binance, Coinbase, Kraken, or Gemini. This initial onramp will seem familiar to users of online investment platforms, allowing for easy access to bitcoin and the crypto universe. By default, the centralized exchange will continue to custody those digital assets unless the investor chooses to change the custody arrangement. Users with small balances may be satisfied with this default custody arrangement, but as the investment grows, investors may wish to consider alternative custody arrangements. Users accessing crypto assets on a centralized exchange don’t actually own those assets in a separate account but own an allocation of the digital assets held in the centralized exchange’s pool of commingled assets. This can be risky, as a centralized exchange like FTX can steal the assets investors thought they owned.
To truly own digital assets, investors need to withdraw assets from the centralized exchange and build their own separate accounts in a self-custody wallet. Self-custody wallets can be complex and risky, as investors rely on a phone or hardware device and the software deployed by those devices. Assets can be lost if investors lose the device, forget the password or private key, or die before sharing the access procedure with their family or business partners.
Rather than using the default of a single private key controlling the wallet, investors can set up a multi-signature private key system, allowing their family or business partner to access the digital assets in their absence. For example, a 2-of-3 private key system can be set up, where a married couple or two business partners each have a key while a third party also has a key. If the initial investor loses their key or can no longer sign a transaction, their partner and the third party can access the assets with the other two keys.
Palisade offers a full spectrum of custody options. Palisade is a regulated custodian in France and in Europe, can serve as a third party in a multi-signature key system, or can provide self-custody technology for investors to implement on their own. In addition to digital assets such as bitcoin, Ether, or Solana, real-world assets such as real estate, private equity, gold, or carbon credits can be tokenized and held in blockchain wallets.
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