What is Custody?

Explains the concept of custody

Asset-backed tokens usually involve trust in the institution(s) holding the asset; this seemingly goes against cryptocurrencies’ ethos, which seeks to minimize the need for trust in operations. Some key questions to answer here are:

  • Is the asset holder authorized in the existing legal framework to hold the asset?

  • Can the distributor mint or create an arbitrary amount of tokens?

  • How does the custodian prove possession of the asset under custody?