Why Companies Should Rethink XRP Custody
Esteemed crypto analyst Vincent Van Code has offered insights into why businesses might want to reconsider holding their XRP in-house, especially with the emergence of specialized treasury firms. In his analysis, Van Code suggests that companies should explore exposure through ETFs and other regulated investment vehicles instead of directly holding the digital currency.
The Pitfalls of Self-Custody for XRP
In a recent post on social media platform X, Vincent Van Code highlighted the complexities companies face when they opt to self-custody XRP. He noted that without realizing it, these organizations essentially transform into banks, security firms, and regulated financial entities the moment they commence self-custody. The implications of this transformation can be significant, involving extensive compliance and operational costs.
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Van Code pointed out a common misconception among businesses: they often equate holding digital tokens with holding traditional cash in a bank. However, the reality is starkly different. Custodying XRP involves intricate, costly, and compliance-intensive processes. He used XRP as a prime example of these challenges.
For large-scale self-custody, companies must navigate more than just securing a seed phrase. They take on the responsibility of managing a regulated asset environment, which demands annual audits, SOC2 controls, and secure cold storage solutions. Furthermore, they must manage key ceremony documentation, duty segregation, insider threat mitigation, and constant monitoring.
Additional Challenges of Crypto Custody
Van Code elaborated that organizations contemplating self-custody of XRP need robust support systems, including incident response teams, compliance officers, risk management teams, and clearly defined internal policies. Additionally, they must establish board oversight and maintain comprehensive legal and operational safeguards. The financial burden of these measures is substantial.
According to Van Code, implementing a thorough crypto custody program could cost businesses upwards of seven figures annually. External audits alone, encompassing SOC2 Type II, penetration testing, cyber insurance, regulatory reporting, and chain-of-custody reviews, can range from $250,000 to $500,000 every year.
On top of these expenses, companies must also employ dedicated staff to manage their XRP assets. They must be prepared for potential risks and liabilities, such as system failures, regulatory inquiries, or audit discrepancies.
Strategizing for Institutional Adoption
Vincent Van Code asserts that the optimal strategy for widespread XRP adoption does not lie in thousands of companies individually holding the token. Instead, he advocates for regulated investment vehicles like spot XRP ETFs and institutional treasury services, such as those offered by Ripple-backed Evernorth.
These solutions mitigate compliance burdens, reduce audit obligations, minimize operational risks, and lower infrastructure costs. Van Code emphasizes that such vehicles enable companies to gain XRP exposure without essentially becoming financial institutions. For global adoption of the token by mainstream enterprises, structured and regulated approaches are essential, rather than do-it-yourself custody methods that might crumble under their own complexity.
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