The Switzerland-based Capital Markets and Technology Association (CMTA) has published a common industry standard for the custody and management of digital assets.
Announced on April 30, CMTA’s “Digital Assets Custody Standard” aims to clarify the differences between storing cryptocurrencies versus traditional assets, as well as to set baseline security and operational requirements for industry actors.
Crypto storage requires a new approach
CMTA is a non-profit, independent association established in Geneva in 2018 with the aim of promoting the adoption of distributed ledger technologies, such as blockchain, and digital assets in the financial markets.
The CMTA’s General Secretary Fedor Poskriakov, a partner at Swiss law firm Lenz & Staehelin, underscored that the new document represents the Swiss financial industry’s first step towards reaching a consensus on common standards for the custody and management of digital assets:
“This will greatly contribute to the emergence of fully digital capital market infrastructures, including integrated custody and secondary trading venues. The benefits of the digitalization of the financial industry are such that the evolution towards decentralized infrastructures seems inevitable.”
The CMTA has emphasized that the storage of digital assets is significantly different from traditional assets, which typically use centralized systems and don’t rely on cryptographic mechanisms. For crypto, investors need high assurances that the decentralized infrastructure for storage is well developed and resistant to loss, theft or hacking.
Alongside establishing a baseline for custody, the CMTA has outlined some of the benefits it sees in the use of DLT for financial markets. In particular, the association points to the technology’s value for small and medium enterprises (SMEs) for simplifying and democratizing financing mechanisms.
In CMTA’s view, blockchain can enable SMEs to issue and trade securities on decentralized platforms and to make use of disintermediation and new digital infrastructure to gain access to markets usually reserved for larger market participants.
As reported, CMTA has previously published anti-money-laundering standards for digital assets and DLT. Like this week’s custody standards, these are not statutory and do not have formal regulatory status. The association presents them as a mark of consensus among financial sector experts when it comes to best practices for digital assets.