Crypto custody reform could spark institutional interest, says Palisade co-founder

The potential decline in the dry guard rule could considerably reshape the landscape of digital assets, according to Manthan Dave, co-founder of Palisade, a digital active guard supported by Ripple.

Dave supports in a note sent to Crypto.News that the reversal of the rule would cause short and long -term changes in the way digital assets are managed and stored.

The guard rule was introduced in response to high -level failures such as FtxThis clearly indicated that there were notable weaknesses in the way in which customers’ assets were managed. Dave noted that the rule was to prevent similar mismanagement by forcing companies to use a qualified goalkeeper. However, a more effective approach would involve creating structured directives rather than imposing a general requirement.

“A potentially better approach could be to provide directives that would serve as a structural framework allowing companies to store and manage digital assets for themselves and their customers,” said Dave.

He suggested that these guidelines could cover essential practices such as the segregation of assets or align with the specific requirements of the Central Bahreïdes Bank concerning the storage of cold.

Interest and institutional acquisitions could follow

Dave expects the reversal of the rule initially opens up new commercial opportunities for cryptographic companies, but the long -term impact could be even more significant.

“This will force traditional financial institutions to be aggressive to get on board with the crypto. We will probably see an era of acquisitions where financial institutions will buy portfolio providers of digital assets as a means of retaining customer capital, “he said.

Crypto-native guards, added Dave, is better suited for managing digital assets due to their deeper alignment with the web3 industry.

“Traditional financial institutions are slower and have an approach opposed to risks for new asset classes,” he said, stressing the importance of specific industry expertise.

Need a structured framework

For the future, Dave hopes that Titles and exchanges Commissioner Mark Uyeda will replace the guard rule with a balanced framework rather than leaving a regulatory difference.

“Ideally, we would like to see a replacement of the coverage rule with a high -level initial framework that establishes expectations and gives clarity, followed by a complete rules of rules,” said Dave. “Complete elimination without anything to take its place will proliferate fear, doubt and uncertainty on the market.”