Institutions are increasingly challenged by the traditional asset management model when it comes to Bitcoin, according to Kevin Loaec, CEO of Wizardsardine. While they typically rely on large custodians to manage risk through scale and compliance, Bitcoin’s nature as a bearer asset complicates this approach. Once a transaction occurs, it is irreversible, and control lies solely with the holder of the cryptographic keys, not with any intermediary.
This shift has significant implications for financial markets. Institutions that continue to treat Bitcoin like traditional assets may inadvertently amplify risk by relying on custodial models that concentrate control. High-profile custody failures have already demonstrated that insurance often falls short during systemic events, leaving clients vulnerable. As institutions grapple with these risks, the need for policy-driven custody solutions becomes clear, allowing for better governance and risk management directly on the blockchain.
The key takeaway for market professionals is that embracing Bitcoin’s unique properties can enhance asset control and governance. Institutions should consider adopting on-chain solutions that prioritize structural safety over traditional custodial models, thereby reducing their exposure to counterparty risks and enhancing operational resilience.
Source: cointelegraph.com