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Custody Risk

Understanding and mitigating physical asset custody risks.

Custody Risk Factors​

Physical Security​

  • Theft or break-in
  • Natural disasters
  • Employee fraud
  • Transportation risks

Operational Risk​

  • Custody partner bankruptcy
  • Loss of access
  • Documentation errors
  • Audit failures

Mitigation Strategies​

Insurance Coverage​

  • Full value insurance on all assets
  • Coverage for theft, damage, loss
  • Business interruption insurance
  • Professional liability coverage

Partner Selection​

  • Vetted, reputable custody partners
  • Industry-leading security standards
  • Regular third-party audits
  • Proven track record

Multi-Custody Strategy​

Future: Diversification across multiple custody partners to reduce single-point-of-failure risk.

Proof of Reserves​

Regular attestations verifying:

  • Physical asset inventory matches on-chain tokens
  • Assets properly insured
  • Vault security maintained
  • Documentation complete

User Protections​

  • Insurance fund coverage
  • Legal recourse mechanisms
  • Transparent reporting
  • Regular audits

Emergency Scenarios​

Procedures for:

  • Custody partner issues
  • Insurance claims
  • Asset retrieval disputes
  • Force majeure events