What is a Qualified Custodian, and How Are They Regulated?
The SEC, under Section 408 of the Investment Advisors Act of 1940, defines a “Qualified Custodian” as a Bank or Trust Company responsible for securely holding client assets, managing reporting, and reconciling accounts. At ETZ, our designated Qualified Custodians are Solera Bank and Coinbase Prime, both highly reputable and regulated institutions with a focus on crypto asset security.
How Does ETZ Help Secure My Account and Digital Assets?
ETZ is a technology platform that facilitates secure buying, selling, and management of cryptocurrency for clients. While ETZ itself does not serve as an exchange, custodian, trust company, broker, dealer, or investment advisor, it works exclusively with regulated custodians, including Solera Bank and Coinbase Prime, to ensure client asset safety. Importantly, ETZ client assets remain off-balance-sheet, enhancing protection.
How Are My Crypto Assets Secured Through ETZ?
ETZ collaborates with Solera Bank and Coinbase Prime to provide clients with a robust institutional storage infrastructure for digital assets. Key security protocols include:
- Multi-Party Computation (MPC): Advanced cryptographic methods for secure key management.
- Cold Storage Solutions: Offline storage minimizes exposure to online threats.
- Frequent Security & Financial Audits: External audits uphold our custodians’ SOC 2 Type II certifications.
- Insurance Coverage: Crime insurance adds a layer of security for client holdings.
What Happens to My Assets if ETZ or Its Custodians Discontinue Operations?
ETZ and its Qualified Custodians, Solera Bank and Coinbase Prime, have continuity plans in place to ensure clients maintain access to their accounts in the event of business disruptions. In such cases, clients will retain ownership of their assets and may transfer funds to another Qualified Custodian. Client assets are always stored separately from ETZ’s operating funds, safeguarding them against any obligations of ETZ, Solera Bank, or Coinbase Prime.
Does ETZ Offer Lending Against Client Assets?
No, ETZ, Solera Bank, and Coinbase Prime do not lend against client assets. ETZ does not directly hold custody of client funds, and all assets are managed securely by third-party institutional custodians. Per our Terms of Service (Section 4.b), client assets are never mixed with ETZ’s operating funds.