How do I assess security in crypto custody services?

The crypto ecosystem, with its fluctuations and the constant emergence of new "altcoins", encourages cryptocurrency users to pay closer attention to transparency, security and liquidity.

The crypto universe is gaining ground among investors. The main attractions include its growth potential, access to global markets, decentralization, and early investment opportunities. This reality of searching for new investment opportunities is also fed by the constant appearance of new altcoins. But before investing in a new project, it is essential to research and compile all possible information: transparency, liquidity, and security are some of the main aspects to keep in mind.

Restoring investor confidence

The truth of the matter is that, especially after the bankruptcy of the FTX exchange and after the increase in withdrawals and the subsequent price plunge by FTT (the platform’s native token), transparency is the key element for restoring the confidence of investors, who must have access to financial information about the transactions and activities carried out by an exchange. If the documentation of a project seems to be insufficient or provides scarce information, it’s better to let the project go.
The widespread concern about the solvency of exchanges has led to the implementation of new systems for verifying assets and liabilities, with the aim of bringing peace of mind to investors and customers alike. Binance Holdings Ltd. and, for example, hired external auditors to provide “proof of reserves” reports, an increasingly popular type of certification to show that firms are solvent.
The objective of the process is to provide investors with the guarantee that a firm’s tokens are backed by liquidity reserves and that their funds are secure. Finally, all the players involved in the cryptocurrency ecosystem should commit to a path that leads to regulatory harmonization in order to guarantee transparency and provide consumers with the best possible protection.
Every day, more and more institutional investors are joining the blockchain ecosystem, which requires greater convergence between the traditional financial system and the new digital economy that is sprouting. In this regard, ensuring all guarantees in terms of security and counterparty risks is fundamental to the custody service of BBVA in Switzerland.

Proliferation of cryptocurrency projects

New cryptocurrencies are born and die every day. According to the platform, Coinopsy, there are over 2,400 dead cryptocurrencies. The reasons why they no longer work include abandonment, being used as a prank or fraudulently, and a number of other incidents or irregularities related to the Internet, wallets, updates, or volume. 

The best of both worlds

All your operational needs in one place. Invest in both traditional and digital assets with the backing and experience of the most secure Swiss banking.