Ripple’s latest policy blog post sheds light on the evolving landscape of digital asset custody, positioning it as a pivotal element for institutional adoption of stablecoins and tokenized assets. Released on Monday, the post by Rahul Advani, Ripple’s global co-head of policy, and Caren Tso, Asia-Pacific policy manager, argues that robust custody solutions are now indispensable for enterprises aiming to scale digital finance effectively.
The Crucial Role of Custody in Digital Finance
In their detailed exposition, Advani and Tso emphasize that custody has emerged as a critical entry point for businesses venturing into the digital finance sphere. They cite a Ripple-Boston Consulting Group report projecting the tokenization of real-world assets could skyrocket to $18.9 trillion by 2033. This staggering figure underscores the burgeoning importance of custody solutions, a sentiment reflected in Ripple’s survey revealing that over 50% of firms in the Asia Pacific intend to embrace custody strategies within the next three years. This aligns with recent developments in Hong Kong, where the SFC has ordered tighter crypto custody standards following global breaches, highlighting the increasing regulatory focus on secure custody practices.
The timing of the blog coincided with Ripple’s co-hosted workshop, “Custody & Cybersecurity: Institutional Best Practices for Stablecoins and Beyond,” with Blockchain Association Singapore (BAS) earlier this month. The event spotlighted institutional standards for stablecoin custody, culminating in a “best practices” report from BAS subcommittees dedicated to stablecoins and cybersecurity.
Four Pillars of Custody Design
The authors lay out four guiding principles for designing effective custody frameworks. First on their list is a “compliance-by-design” strategy. Regulatory bodies like Singapore’s Monetary Authority demand stringent asset segregation and recovery protocols, making compliance non-negotiable.
Secondly, Advani and Tso stress the importance of selecting the right custody model—be it third-party, hybrid, or self-custody—highlighting the growing diversity in wallet types that transcend the traditional hot-versus-cold divide.
Operational resilience takes the spotlight as the third principle, with an emphasis on creating workflows that are disruption-proof and meet recovery benchmarks like those stipulated by the EU’s Digital Operational Resilience Act. Integral to this resilience is robust monitoring and incident-response capabilities.
Governance comprises the fourth pillar, focusing on duty segregation, independent oversight, and audit trails as vital components for maintaining trust in custody solutions.
Expanding Horizons for Stablecoins
Beyond the technicalities, Ripple envisions custody as a bridge enabling stablecoins to penetrate mainstream applications such as trade finance, cross-border payments, and liquidity management. This vision is echoed by Chinese financial giants who are diving into the $30 trillion real-world asset tokenization, further illustrating the global momentum towards integrating tokenized assets into traditional financial systems. Enterprise-grade custodians, according to Ripple, can facilitate this transition by offering advanced API integration, AML tools, and programmable features. They are also tasked with evolving to protect tokenized documents crucial for global commerce.
Ripple’s blog post doesn’t shy away from promoting its own innovations. The company’s Ripple USD (RLUSD) stablecoin, issued under a New York Trust Company Charter, boasts segregated reserves, independent audits, and full dollar backing. Ripple’s custody platform, they argue, is crafted to assist institutions in managing tokenized assets while adhering to compliance and operational standards.
The Road Ahead for Digital Finance
As digital finance marches forward, Advani and Tso forecast a future wherein custody infrastructure will increasingly integrate with smart contracts, tokenized documents, and automated compliance. “These capabilities,” they assert, “will help lay the foundation for a digital financial system that is scalable, interoperable, and fit for the new era of finance.”
Yet, questions linger about the pace and scale at which these integrations will occur, and whether the industry can keep up with the rapid evolution of digital assets. Ripple’s insights provide a roadmap, but the journey to widespread institutional adoption of digital finance remains complex and filled with hurdles.
Source
This article is based on: Ripple’s Global Co-Head of Policy on Four Best Practices for Digital Asset Custody
Further Reading
Deepen your understanding with these related articles:
- Tokenized Assets Hit $270 Billion Record as Institutions Standardize on Ethereum
- Hong Kong’s SFC Orders Tighter Crypto Custody Standards Following Global Breaches
- Trump’s SEC Chair Says Agency Is ‘Mobilizing’ to Update Custody, Other Guidance
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
