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Secure Your Digital Assets: The Imperative Role of Custody Services in Safeguarding Access to Your Crypto Wallet

Date
22/08/2023
Written by
Lykke
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Trading digital assets such as cryptocurrencies can generate great opportunities, but it also entails its own risks. The most important of these risks is the permanent loss of access to your assets. If you forget your password, or even worse, if you pass away without leaving clear instructions behind, your entire cryptocurrency wallet is lost – forever. This is why custody is so important when operating with digital assets.

In traditional finance, there are numerous laws and supervisory mechanisms that protect investors. They can call their financial institutions whenever a problem arises. However, the developing digital asset industry remains largely unregulated and safeguards are underdeveloped. This means that investors have very few options of who to call when they encounter a problem regarding their digital assets. 

Each digital asset is allocated a set of public addresses and private keys (unique numbers on a decentralized digital ledger). These private keys represent the control and ownership of the digital asset and so whoever has them also has the asset. 

Access to a crypto wallet can be delegated to multiple parties

Lykke's flagship custody service, AZOBÉ, stands as a pinnacle of security in the market. Distinguished by its multi-layered asset security framework, AZOBÉ empowers investors to establish personalized security policies. This unique feature enables them to delegate access and control of their digital assets to various members within their organization. The bedrock of this service lies in its sophisticated technology, fortified by a dedicated customer support team available round the clock. 

 “AZOBÉ’s key strengths are cost efficiency combined with simplicity,” says Lykke’s founder Richard Olsen. The service can be accessed effortlessly through a dedicated web portal, complemented by the security of a separate mobile app for transaction approvals. 

AZOBÉ offers custody for a diverse array of digital assets. Right now, Azobé supports cryptos on 18 different blockchains, including the largest crypto currencies Bitcoin, Ethereum, Cardano, Polkadot, Solana, Polygon… The aim is to eventually expand the service to offer custody of all types of digital assets including non-fungible tokens (NFTs), stablecoins and security tokens.  

AZOBÉ is not a third-party custodian, so assets remain in the client’s control at all times

When considering third-party custodians, the immediate association for many is with centralized crypto exchanges. The inherent risk lies in the event of an exchange's insolvency, leading to the unfortunate loss of digital assets held within. An illustrative case is the distressing incident involving FTX in November 2022, wherein over 100,000 clients, with approximately 9 billion US dollars in funds, faced irrevocable losses.

In stark contrast, AZOBÉ takes a radically secure approach. By housing funds in segregated wallets, AZOBÉ ensures that it never exercises control over users' funds. The critical distinction lies in empowering clients to set up their own security policies and designating specific signatories for transaction authorization. This meticulous control mechanism mitigates the risks associated with centralized exchanges, providing AZOBÉ clients with unparalleled safety and peace of mind.

AZOBÉ – complies with Swiss VQF rules

Lykke’s custody service is a perfect fit for institutional clients, family offices, high-net-worth individuals as well as treasury departments of small banks.

AZOBÉ is audited by the Swiss self-regulatory body, Financial Services Standards Association (VQF). AZOBÉ is thus fully VQF compliant, embodying Swiss traditions and values to deliver security, performance and control. 

Contact Lykke for more information. 

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