The highly anticipated ‘Bitcoin halving’ around April 20 marks a pivotal moment for crypto investors, traders, and other stakeholders. With each halving poised to potentially reshape market dynamics, the spotlight intensifies on the crucial role of digital asset custody. Against this backdrop, Ravi Kumar of AlexaBlockchain interviewed Manhar Garegrat, the Country Head of India & Global Partnerships at Liminal Custody Solutions.
Liminal, revered for its robust digital asset custody and wallet infrastructure, boasts a commendable track record of safeguarding assets worth over $700 million.
As the crypto community stands on the threshold of the fourth Bitcoin halving, the insights shared by Garegrat illuminate the complex interplay of challenges and strategic imperatives for custody providers. From navigating the turbulent waters of market volatility to reinforcing the fortresses guarding digital assets, Garegrat’s perspectives offer a deep dive into the advanced preparations and innovative solutions crafted by Liminal to ensure the security of digital assets during these pivotal moments.
The conversation explores the nuanced landscape of crypto custody, shedding light on the multifaceted challenges poised by the halving event, the indispensable role of custodial services in asset protection, and the sophisticated security measures underpinning Liminal’s infrastructure. Furthermore, it addresses the actionable steps individuals can take to safeguard their digital assets and the insurance safeguards Liminal extends to its clients.
As we stand on the brink of another halving milestone, this dialogue between Kumar and Garegrat not only demystifies the complexities surrounding digital asset custody but also underscores the paramount importance of security and preparedness in the ever-evolving domain of cryptocurrency.
Q1. In light of the upcoming Bitcoin halving event, are there specific challenges that crypto custody providers anticipate? How are these challenges unique compared to the regular operational risks?
Manhar Garegrat: While there is no direct impact as a result of the upcoming 4th Bitcoin halving, there are several second order effects that will require all VASPs including crypto custody providers to consider and manage proactively.
One major challenge is the heightened market volatility and increased trading activity leading up to and following the halving event. This volatility typically results in higher risks of cyber threats like hacking attempts and phishing attacks which target digital asset custodians and their clients.
Additionally, the influx of new investors and heightened media attention during halving events significantly amplifies operational challenges ranging from increased transaction volumes to scalability issues. These challenges are unique compared to regular operational risks due to the sudden surge in market activity and the heightened level of attention and scrutiny surrounding halving events.
Q2. Can you explain the role of custodial services in ensuring the safety and security of digital assets during periods of increased market activity, such as the halving event?
Manhar Garegrat: Custody services play a crucial role in ensuring the safety and security of digital assets especially during events that can have amplified price volatility and activity, like the Bitcoin halving.
Custodians establish a secure environment for digital asset storage by utilizing advanced encryption methods, multi-factor authentication, and continuous monitoring systems to safeguard against cyber threats and unauthorized access.
By fortifying security measures, custodial services establish guardrails that effectively help mitigate risks associated with theft, fraud, and operational errors which have a higher propensity of cropping up during periods of heightened market activity.
Q3. Can you share details about your cold and hot wallet security measures and how they are optimized for events like Bitcoin halving
Manhar Garegrat: At Liminal, we understand the key bottlenecks for institutions when dealing with digital asset wallets, hence we house a hybrid wallet infrastructure with best-in-class security parameters to safeguard assets against all kinds of external and internal attacks.
To secure our cold and hot wallets, we deploy the following practices:
- Liminal is only the second wallet provider with a CCSS Level-3 certification, whereby our hot and cold wallets surpassed the audits to become a QSP.
- Being a CCSS-certified platform, we follow rigorous key generation and backup practices in institutiona-grade devices like Cryptosteel.
- Our cold storage is protected with FIPS 140-2 level 3 certified HSM devices like Trezor and Ledger.
We support a dynamic configuration of wallets:
- Multisig wallets
- Cold wallets
- Refill wallets
- MPC wallets
- Deposit wallets
- Withdrawal wallets
- Mobile wallets
For cold storage, we utilize a method that generates multiple private keys from a single master seed. This creates a vast number of secure locations to store client assets, significantly reducing the risk of a single point of failure.
For hot wallets, we employ a multi-layered security approach which includes:
- Multi-factor authentication (MFA) adds an extra layer of security during login attempts.
- Secure transaction authorization processes ensure all transactions require proper approval procedures.
- Hardware Security Modules (HSMs) safeguard the private keys used for hot wallet operations, providing an additional level of protection.
By implementing these robust security measures, Liminal ensures the safety of your digital assets, regardless of market conditions.
Q4. What steps can individuals take to ensure the safety of their digital assets during halving periods?
Manhar Garegrat: To ensure the safety of their digital assets during halving periods, individuals can take several proactive steps.
Firstly, they should choose reputable custodial services that prioritize security and regulatory compliance. For users comfortable with managing their own wallets, implementing advanced security measures like multi-signature wallets requiring multiple private keys for transaction authorization can further enhance security.
Regardless of the storage method chosen, regularly monitoring accounts for any suspicious activity and staying informed about emerging security threats is crucial.
Q5. How does your insurance coverage (if any) protect investors’ assets during the halving event and in the case of security breaches?
Manhar Garegrat: Liminal offers insurance coverage (up to $50 million) to protect client assets in case of security breaches. Each client asset is insured in proportion to their AUP’s. We also employ enterprise-grade security measures and multi-key backups to further safeguard assets.
Thank you!
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To learn more about Liminal Custody Solutions, visit https://www.liminalcustody.com/
