Ripple expands institutional custody stack with staking and security integrations
Summary
New integrations allow banks and custodians to offer custody and staking services seamlessly, eliminating the need for their own validator or key-management infrastructure. This innovation enhances operational efficiency in the financial sector, paving the way for broader cryptocurrency adoption.
Key Insights
What is institutional custody and why do banks need it for digital assets?
Institutional custody is a secure system that allows banks and financial institutions to store and manage digital assets on behalf of their clients while maintaining strict control over cryptographic keys—the digital credentials needed to access and transfer assets. Banks need specialized custody solutions because they must meet stringent regulatory compliance requirements, maintain audit trails, and prevent unauthorized access to customer funds. Ripple Custody provides bank-grade security with features like transaction whitelists, withdrawal limits, and role-based authorization that enable regulated institutions to offer digital asset services while maintaining the operational controls and governance standards required by financial regulators.
What are hardware security modules (HSMs) and how do they protect digital assets in custody?
Hardware Security Modules (HSMs) are specialized physical devices that generate, store, and manage cryptographic keys in a highly secure environment isolated from standard computer networks. They prevent unauthorized access to the keys needed to move digital assets. Through its partnership with Securosys, Ripple now offers HSM-based custody solutions available both on-premises and in the cloud, allowing institutions to maintain direct control over their cryptographic keys without the traditional costs and complexity of building their own security infrastructure. This approach eliminates single points of failure and ensures that keys never exist in a vulnerable state where they could be compromised.