RIA’s Guide to Safeguarding Digital Assets

As investor demand for digital assets increases, registered investment advisors (RIAs) have a growing list of considerations and challenges that must be addressed. RIAs must securely protect their assets under management in compliant ways while still maintaining operational efficiency. This highlights the importance of choosing the right digital asset partner — one that’s secure, reliable, and fully compliant.

As an RIA, here are 5 things to consider when choosing yours.

#1 Qualified Custodian

Qualified custodians are regulated entities that safeguard the assets on behalf of clients. They must meet rigorous standards and are subject to audits to ensure their continued compliance with those standards. This is important for RIAs as it helps them meet their fiduciary responsibilities. Qualified custodians must keep their client funds segregated from other assets securing the assets and protecting their clients. They must maintain accurate records and provide regular reports to their clients.

#2 Security

Securing digital assets includes a wide range of features and functionality. This can include cold storage where the assets are stored on machines that aren’t connected to the internet — so hackers can’t get to them. The custodian should maintain insurance against theft or loss of keys, have redundant security processes in place, and otherwise use the highest levels of secure technologies and best practices to protect the digital assets.

#3 Portfolio management and reporting

Ensure that the digital asset partner of choice provides innovative tools to manage, analyze, and report on digital asset holdings within client portfolios in intuitive ways. This can include smart order routing, easy rebalancing capabilities, staking, access to deep, aggregated liquidity with a vast network and more.

#4 Experience and reputation

Make sure that the partner you’re considering has a proven track record, dedicated to custody as a core function — with a solid reputation for security, reliability and known industry expertise. Experienced partners have a greater ability to efficiently settle trades and otherwise have the knowledge and expertise to perform custodial functions. Although it’s easy to make a case that each of the factors described here is vital, the reputation and trustworthiness of your partner certainly is a top aspect when you make your selection.

#5 Scalability and integration

As your RIA business grows, you’ll need a partner that can scale alongside you, meeting your needs every step of the way: in technology and business practices while keeping up with industry changes in real time. As a related point, you’ll want a partner that can smoothly integrate their technologies and procedures with yours to work hand-in-hand with you to protect client assets. Seek out a frictionless experience that eliminates barriers and empowers you to optimally serve clients.

What’s next?

Choosing the right digital asset partner is crucial for RIAs looking to navigate the exciting world of digital assets. By prioritizing these 5 considerations — qualified custodianship, security, portfolio management tools, experience and scalability, RIAs can ensure their clients’ assets are protected and their digital asset strategy thrives.

To learn more about how the BitGo companies are helping RIAs reach their digital asset potential as their secure, reliable and compliant partner of choice, contact us today.