Custody as Cornerstone: Why Secure Storage Drives Stablecoin Adoption

Ripple's recent workshop on digital asset custody, co-hosted with the Blockchain Association Singapore (BAS), highlighted the critical role that secure custody infrastructure will play in the future of stablecoins and broader digital finance. The event, titled "Custody & Cybersecurity: Institutional Best Practices for Stablecoins and Beyond," aimed to establish best practices for institutional participants. Ripple executives emphasized that custody is no longer just a technical requirement but a foundational element for the adoption of stablecoins and tokenized assets at scale [1]. The workshop resulted in the release of a best practices report co-developed by BAS subcommittees focused on stablecoins and cybersecurity, offering actionable guidance for the industry [1].

According to Ripple's policy team, digital asset custody is now central to scaling stablecoins, tokenized finance, and cross-border settlements. Rahul Advani, Ripple’s global co-head of policy, and Caren Tso, Asia-Pacific policy manager, outlined four core principles for custody design, including compliance-by-design, tailored models, resilience, and governance. The report also pointed to the importance of meeting regulatory expectations, such as Singapore’s Monetary Authority (MAS) requirements for asset segregation and recovery protocols. With growing institutional demand for custody solutions, the report noted that firms must choose models that align with their operational needs, including third-party, hybrid, or self-custody options [1].

Operational resilience was another key theme. The executives emphasized that custody workflows must meet strict recovery benchmarks, particularly those set by the EU’s Digital Operational Resilience Act. Strong monitoring and incident response processes are essential to maintaining system integrity in the face of disruptions. Governance, too, is critical, with the report highlighting the need for segregation of duties, independent oversight, and audit trails to build trust among stakeholders. These measures ensure that custody systems not only meet current expectations but are also adaptable to evolving regulatory landscapes [1].

The report also pointed to the transformative potential of enterprise-grade custodians in enabling stablecoins to enter mainstream use cases such as trade finance and cross-border payments. Ripple’s own custody platform is designed to meet institutional compliance and operational standards, with features such as API integration, AML tools, and programmable functions. The company's Ripple USD (RLUSD) stablecoin, issued under a New York Trust Company Charter, is another example of a custody solution tailored to meet regulatory and security expectations [1]. Advani and Tso concluded that custody infrastructure must evolve to integrate more deeply with smart contracts, tokenized documents, and automated compliance tools in the coming years [1].

The need for robust custody solutions is further underscored by the increasing adoption of tokenized real-world assets, projected to reach $18.9 trillion by 2033, according to a Ripple and Boston Consulting Group report. With over half of firms in the Asia Pacific planning to adopt custody solutions within the next three years, the demand for secure, compliant, and flexible custody models is expected to grow significantly. The industry must move beyond outdated custody models, such as multi-party computation or traditional hardware wallets, which often lack the necessary security, segregation, and governance for institutional use [2]. Instead, custody infrastructure must offer real-time oversight, tamper-proof records, and post-quantum cryptographic readiness to meet the demands of institutional operators and global regulatory expectations [2].

Source:

[1] Ripple / XRP News: Ripple's Policy Team on Best Practices (https://www.coindesk.com/policy/2025/08/19/ripple-s-global-co-head-of-policy-on-4-best-practices-for-digital-asset-custody)

[2] Rethinking Custody for the Institutional Stablecoin Era (https://vaultavo.com/academy/rethinking-custody-for-the-institutional-stablecoin-era/)