What is a custodian in simple terms.

The world of finance is incredibly diverse and can become understandable if you get to grips with different terms. For example, understanding what a custodian is, or to be more precise, what a custodian bank is. A custodian bank can help earn on various types of investments. In cryptocurrency, it is also a useful tool. 

In simple terms, what it is: a keeper of certain assets. That is, a company or organization, much less often an individual, takes on the storage of assets. Clients entrust them with this responsibility with certain guarantees. 

What is a custodian? 

So, in the world of finance, just like in the world of cryptocurrency, there are quite a few useful individuals or organizations. In this case, the custodian plays a key role in storing and managing assets, which is particularly relevant for those working with cryptocurrencies, investments, and digital assets in Ukraine in 2024. Usually, especially when it comes to large sums, this company becomes a bank. To put it even more simply, it is an organization that can store assets. After all, at first glance, this seems like a simple task. 

Thus, it can be either a traditional bank or a specialized platform for storing cryptocurrencies. The main goal of a custodian is to protect the client's assets from losses, theft, and possible technical issues. That is, the organization that can take on such responsibility can become the official keeper of the assets. Besides storage, such an organization also takes on the responsibility of safeguarding the assets. That is, guarantees are always present. Such a bank stores money, securities, or cryptocurrency, ensuring their protection. In general, anything that can be called an asset. For example, an investor has cryptocurrency. To avoid storing coins on their computer or wallet, they can use the services of a custodian who will securely store them for the client. Overall, the system is simple and straightforward. 

Who needs custodians and why?

Custodians serve as a very valuable tool for many investors. In general, there are many reasons why individuals and companies turn to custodians. Security, convenience, and compliance with laws are the main reasons why custodian services are in demand.

The main objectives of these organizations: 

1. Storing assets in a more secure environment. Custodians have the resources and technology that allow them to store assets securely.

2. The custodian is responsible for the safekeeping of assets, and if something happens, the client can expect compensation.

3. Overall, this method of storage is quite convenient. Storing assets with a custodian makes management easier, especially if you have several different assets or digital wallets.

The organization that takes on such responsibility also complies with all norms and laws. In some countries, the law requires that certain types of assets be stored with certified custodians.

What are the duties of a custodian? 

Custodians not only store assets but also perform other important functions. The obligations of a custodian include:

1. Firstly, they must store the assets. The primary task of a custodian is to ensure the physical or digital security of the assets.

2. They must also monitor transactions. The custodian tracks all transactions and provides reports to the client.

3. They can also help manage risks. A custodian provides protection against unauthorized access and prevents possible cyberattacks.

Additionally, the organization can insure assets. Many custodians offer asset insurance against loss or theft. That is, all these functions are very important and highly effective for generating profit. 

Different Types of Custodians

Depending on the assets, there can be different types of organizations. There are custodians that work only with traditional financial assets like stocks and bonds, and those that specialize in cryptocurrencies.

The most popular type of custodians are the so-called traditional ones. These are financial institutions such as banks and investment companies that deal with the storage of traditional assets.

Similar organizations exist for cryptocurrency. These are companies specializing in the secure storage of digital assets like bitcoin, ethereum, and other cryptocurrencies. They provide secure digital wallets and additional security measures. There are also so-called hybrid organizations. They are also in demand. Some companies offer custodian services for both traditional financial assets and cryptocurrencies.

Choosing a custodian is an important step for investors, as this is the organization responsible for the safekeeping of your capital. You will be able to choose your organization if you understand how a custodian can help earn money.