Increased Safeguards Is Needed For Crypto Growth As Nearly $10B Has Been Stolen: KPMG
- Almost $10 Billion in Crypto Stolen by Hackers Since 2017
- KPMG says the crypto market needs to improve security when it comes to digital assets, seeing the industry is currently valued at $245 billion and growing.
Ever since 2017, hackers have stolen over $9.8 billion in digital assets due to poorly written code or lax security, according to a KPMG report from Monday.
Furthermore, the accounting firm added that the adoption of cryptocurrencies like Bitcoin (BTC) and Ether (ETH) by institutional investors has increased competition amongst investors seeking to occupy a place in portfolios.
This competitive climate means that the safeguarding of tokens to be even more important than it used to be.
Institutional Investors Don’t Take Risks When It Comes to Owning Crypto Assets
The co-author of the KPMG report and co-leader of the crypto asset services at KPMG, Sal Ternullo, said that:
“Institutional investors especially will not risk owning crypto assets if their value cannot be safeguarded in the same way their cash, stocks and bonds are.”
Coinbase Inc., Intercontinental Exchange Inc, Fidelity Investments and Gemini Trust Co. are the first companies to ever offer crypto custody services. Just like a type of bond or cash, cryptocurrencies are bearers instruments, which means they’re owned solely by the bearer.
What is actually being held is a dedicated private key, which consists of a string of characters from a digital wallet or a piece of paper.
If the paper or the key is lost/stolen, the asset is lost. For this reason, key custody represents a challenge for firms that have been offering traditional financial services until now.
KYC and AML Rules to Be Abided By
This is what the KPMG report adds:
“As crypto-assets proliferate, custodians have a tremendous opportunity to profit — both by earning management fees for delivering straightforward custodian services, and also by offering adjacent services only possible in the emerging crypto ecosystem.”
It’s important for the industry to create stricter rules when it comes to storing cryptocurrencies, the accounting firm adds. Much like with other financial transactions, brokers and banks need to respect the know-your-customer (KYC) and anti-money laundering (AML) laws.
According to KPMG, even the already established financial institutions that have the most mature compliance programs have to reconsider the ways they’re offering security for crypto assets.