A custodian is responsible for safely holding assets for an institution or individual for a variety of purposes.
What Is a Custodian?
A financial custodian is a business that holds your financial assets in its actual custody. For simplicity and protection, your money and assets are usually held by a brokerage firm, commercial bank, or a similar organization.
Financial custodians, often known as bank custodians, have physical authority over financial accounts, including checking, savings, money market, and 401(k) accounts. Your checks are made payable and deposited immediately to your custodian against your account number when you deposit funds to any type of account.
Custodians provide services such as transaction settlements, account management, dividend and interest payments collection, foreign exchange transactions, and tax help in addition to safeguarding securities. The costs charged vary depending on the services requested by clients. Some companies charge a quarterly fee depending on the total value of the assets in possession.
Companies that are considered as custodians are often huge and respected organizations that are in charge of the security of assets and securities worth millions or billions of dollars. A custodian can be designated to handle the assets of a minor child. Custodians are frequently used by investment advising companies to preserve the funds they manage for their customers.
A power of attorney can also provide a custodian the ability to claim custody of assets. That implies the custodian can make decisions on behalf of the customer, such as changing investments or paying bills.
The Bank of New York Mellon, JPMorgan Chase, and Citigroup are among the major custodian banks in the United States. Meanwhile, the Bank of China in Hong Kong, Credit Suisse and UBS in Switzerland, and Deutsche Bank in Germany are some of the most well-known custodians in the world.
Even though the specialty is still in its infancy, competition is already increasing. Even though established solution providers control a major share of the market, new players who are just breaking into the sector and small financial firms are growing their operations in the industry. Some popular ones include BitGo, Coinbase Custody, and others.