In today's rapidly evolving financial landscape, digital assets represent both a significant opportunity and a substantial risk for institutional stakeholders. High-profile breaches, such as the ByBit $1.5 billion incident, have underscored that merely adequate security is no longer acceptable. Institutions must adopt a custody strategy that not only withstands cyber threats but also aligns with increasingly stringent regulatory standards.
At a recent Amber Group webinar, CEO Sarah Ye of RigSec joined a panel of industry leaders to discuss practical strategies and invaluable insights for institutions aiming to establish secure, compliant, and scalable digital asset operations across the Asia-Pacific region.
The New Institutional Standard: Security and Compliance by Design
Digital asset custody today demands more than just safe storage.
Institutions must embed security and compliance into every facet of their operations, from infrastructure deployment to transaction execution.
Three Critical Pillars for Institutional Custody:
• Institutional-Grade Infrastructure
Secure, on-premise wallet architecture is the foundation for protecting digital assets against both external attacks and internal threats.
• Complete Visibility and Transaction Verification
Features like “What You See Is What You Sign” (WYSIWYS) ensure that every transaction is transparent and authenticated, eliminating blind approvals and preventing fraud.
• Automated Risk Control and Policy Enforcement
Advanced systems automatically enforce security policies and monitor risk, reducing reliance on manual processes and minimizing human error.
Elevating Risk Management: Best Practices for Institutional Digital Asset Custody
Effective risk management is the cornerstone of institutional-grade digital asset custody. Drawing on insights from Amber Group’s Chief Risk Officer, Betty Shao, and RigSec’s experience across APAC, here are essential best practices every institution should adopt:
• Lifecycle AML Compliance:
Implement robust KYC onboarding and continuous KYT monitoring to meet evolving AML regulations.
• Real-Time Fraud & Risk Monitoring:
Use advanced analytics to detect suspicious transactions and manage fraud, credit, and market risks proactively.
• Ongoing Counterparty Due Diligence:
Automate due diligence and continuously monitor counterparties to ensure secure business relationships.
• Policy Enforcement Through Technology:
Utilize solutions like RigSec’s Policy Enforcement Engine (PEE) to authenticate sensitive actions and enforce internal risk policies.
• Comprehensive Audit Trails:
Log and verify every action for full transparency, empowering compliance teams and satisfying regulatory requirements.
• Risk Control Automation:
Automate risk controls and policy enforcement to minimize human error and ensure consistent compliance.
Lessons Learned from Major Breaches
The ByBit hack provided a sobering reminder of what can go wrong in the absence of stringent security and governance:
• Spoofed front-end interfaces led to unauthorized actions.
• Blind signing vulnerabilities exposed private keys.
• Lack of automated policy enforcement allowed breaches to escalate.
Lessons Learned:
• Implement on-premise, institutional-grade wallet infrastructure.
• Ensure full visibility on trusted devices and transaction verification.
• Employ automated risk control and policy enforcement.
For detailed insights, see our blog post on Bybit’s $1.5 Billion Hack: How Major Financial Institutions Can Build Effective Security Defenses?”
RigSec’s Approach: Comprehensive, Compliant, and Future-Proof
With extensive experience serving licensed institutions in Hong Kong, Japan, Singapore, Taiwan, and Indonesia, RigSec delivers solutions that address both operational realities and evolving regulatory requirements:
• End-to-End Custody Solutions: Combining mission-critical software with bank-grade hardware (HSM), RigSec provides secure private key lifecycle management, transaction authenticity verification, and policy enforcement.
• Regulatory Alignment: Our platforms and infrastructures are built to support requirements forJapan’s Certified Crypto Asset Exchanges (CAESP) from JSFA, Singapore’s Major Payment Institution(MPI) from MAS, Hong Kong Virtual Asset Trading Platform (VATP) from SFC, Regulation on AML compliance statement by Taiwan FSC, and other key APAC frameworks.
• Rigorous Validation: Every release undergoes comprehensive security audits and is validated by leading digital asset insurers and security firms.
Practical Recommendations for Institutions
• Implement on-premise, institutional-grade wallet infrastructure to mitigate both cyber and insider threats.
• Adopt multi-factor authentication and financial-grade personal security devices for transaction authorization.
• Ensure all actions are monitored and verifiable to eliminate blind spots and unauthorized transactions.
• Automate policy enforcement and risk controls to meet regulatory demands and respond to threats in real time.
The Path Forward
As digital assets become increasingly mainstream, institutions must elevate their custody standards. By combining advanced technology with regulatory expertise, RigSec empowers clients to secure their digital assets, satisfy compliance requirements, and scale with confidence.
Are you ready to upgrade your digital asset custody from hack-proof to regulator-ready?
Contact RigSec today to discover how our solutions can safeguard your institution’s future.