June 4, 2020 New study highlights the legal uncertainty concerning the impact of crypto custodian insolvencies on investors.

A new study from the Leiden Law School has concluded that it is unclear what legal protections cryptoasset investors currently have in the event of custodians entering insolvency. The report, titled ‘The Failed Hopes of Disintermediation: Crypto-Custodian Insolvency, Legal Risks and How to Avoid Them’, concludes that there is an absence of rules pertaining to the handling of legal risks that result from the insolvency of cryptoasset custody providers. According to the report, the dearth of customer rights in relation to such insolvencies can be in part explained by the lack of harmonization between “private international law rules” that suitably apply to cryptoassets and the relationship between customer and custodian.

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