Using a Fund’s exchange APIs and the Copper Platform for portfolio management, Copper can create a Walled Garden where it provides custody, and multiple exchanges facilitate trading and liquidity.
The nature of the blockchain is such that transactions are permanent & immutable.
To prevent malicious attacks against a Fund’s infrastructure, and to prevent an Investment Manager being forced to withdraw the Fund’s assets to an unauthorised, potentially criminal, external wallet location:
An Independent Custodian with technological and business process solutions is required to mitigate risk.
EXISTING ECO-SYSTEM
There is no traditional finance model for prime brokerage with digital assets. Currently, investment managers are required to effectively self-custodise their assets. This presents a number of critical risks:
- Private key mis-management could lead to permanently inaccessible Digital Assets
- Exchange credentials could be used to change wallet addresses and divert a Fund’s Assets (Digital + Fiat)
- Loss of Seed could result in a wallet being re-established somewhere else on the blockchain and total loss of a Fund’s Digital Assets
- A fund that does not use an independent Custodian, and does not set up a Walled Garden, is susceptible to theft on multiple fronts
Traditional financial custodians are not equipped to manage these risks.
However, the Copper Unlimited custody application, combined with the Copper Platform for digital asset portfolio management, can be connected to a Fund and a Fund’s Exchange trading accounts, to provide Bespoke Brokerage services for digital assets, securely and conveniently using the Exchange’s APIs. This architecture allows for the safe moving of digital assets within a Walled Garden environment.
Once established, the investment manager is able to trade on and between the Exchanges, and can send Digital Assets to and from the Copper Unlimited vault, both via API using only the Copper Platform
Withdrawing digital assets from Copper Unlimited to a public key address outside of the Walled Garden requires a multi-signature authorisation from the Fund and its Trusted 3rd Party.
For details of all the steps required in order to create a Walled Garden, please read this article on the Copper website: https://copper.co/2018/11/26/introducing-the-copper-walled-garden/
If you would like a demonstration of how this can be set up for your fund, please get in touch.
You can also sign up for weekly newsletters using the form on https://copper.co/insights/
