Hex Safe: Advancing NFT Custody in a Changing Landscape

Hex Safe: Advancing NFT Custody in a Changing Landscape

January 24, 2024

As we enter 2024, the world of Non-Fungible Tokens (NFTs) continues to redefine digital interactions and present new opportunities. Key to navigating this space is understanding the distinction between custodial and non-custodial NFT solutions. Custodial NFTs, such as those offered by Hex Trust, entail entrusting a trusted entity with the responsibility of safeguarding and managing assets. In contrast, non-custodial NFTs grant individuals full control but place the burden of security on them. Given the growing threat of malicious actors targeting blockchain assets, businesses are increasingly turning to institutional custody solutions like Hex Trust to mitigate risks and ensure the safekeeping of digital assets. 

A recent incident highlighting this need is the security breach at the peer-to-peer trading platform NFT Trader on December 16, 2023, where hackers stole millions of dollars worth of NFTs. This emphasizes the importance of advanced security measures, not just for cryptocurrencies but also for other digital assets like NFTs. With custodial wallets, individuals can delegate the management of their keys to a trusted third party, reducing the likelihood of such losses.

Hex Trust emphasizes security, compliance, and user accessibility, integrating with MetaMask Institutional (MMI) to provide a secure platform for accessing decentralized applications (dApps) while maintaining regulatory compliance. By utilizing Hex Trust's expertise, individuals and businesses can confidently participate in the world of NFTs.

Custodial vs. Non-Custodial NFTs

Before exploring the significance of NFT custody services, it's essential to understand the distinction between custodial and non-custodial solutions. Custodial NFTs involve entrusting a trusted entity, like Hex Trust, with the responsibility of safeguarding and managing assets on behalf of the owners. Alternatively, non-custodial NFTs grant individuals full control over their assets but also place the burden of security entirely on their shoulders.

Should You Use a Custodial NFT? 

Custodial NFTs offer a convenient entry point to the NFT ecosystem, providing user-friendly wallets and responsive customer support. These solutions alleviate the burden of managing private keys, but users must trust the provider to safeguard their assets.

In contrast, non-custodial alternatives, such as the Hedera network, empower individuals with full control over their NFTs. These options offer a variety of user-friendly wallets and facilitate low-cost NFT trading.

However, for those seeking enhanced security and risk mitigation, an institutional custody solution like Hex Trust provides significant value. By leveraging Hex Trust's expertise, businesses and individuals can confidently protect their digital assets. Hex Trust prioritizes security, compliance, and user accessibility, ensuring the safekeeping of NFTs in a reliable and trustworthy manner.

Ultimately, the choice between custodial and non-custodial NFT solutions depends on individual preferences and risk tolerance. By carefully evaluating the options and considering the importance of asset security, participants in the NFT ecosystem can make informed decisions that align with their needs.

Hex Safe’s Unique Approach

Hex Trust's NFT custody service, Hex Safe, stands out for its strong focus on security, compliance, and user accessibility. Integrating with MetaMask Institutional (MMI), Hex Trust enables users to securely access over 17,000 decentralized applications (dApps) without compromising private key security, transaction speed, or regulatory compliance. The platform is actively developing tools to enhance Web3 connectivity and establish a prominent presence in the industry.

Key Features of Hex Trust's NFT Custody Service

Hex Trust's Hex Safe offers a comprehensive NFT custody service. By entrusting their NFTs to Hex Trust, users can safely manage their historical artwork, digital land, in-game assets, and tokenized real-world assets through a dedicated NFT dashboard. Notably, non-crypto corporations such as a leading real estate development company and a renowned hotel chain have chosen Hex Trust to store Sandbox's digital land and interact with the Sandbox Metaverse. The service provides strong security measures, regulatory compliance, and a user-friendly interface, making it an ideal solution for safely managing and maximizing the value of diverse NFT portfolios. Here are some of the key features and benefits of Hex Safe:

Rigorous Security Measures: Hex Trust utilizes FIPS 140-2 Compliant Hardware Security Modules to store NFT private keys within an air-gapped environment. This military-grade cross-domain solution safeguards against external and internal attacks, ensuring the highest level of security and encryption.

Compliance and Audit: Hex Trust undergoes annual attestation by Deloitte, including SOC 2 Type 1 and SOC 2 Type 2 audits. Their data centers comply with SOC1, SOC2, SOC3, and ISO 27001 standards. The platform also maintains in-house compliance, anti-money laundering (AML), and counter-terrorism financing (CTF) protocols.

Insurance Coverage: All NFTs stored within Hex Trust's cold wallets are covered by an extensive insurance policy, providing further protection against potential losses.

Vulnerability Testing: Hex Trust conducts third-party penetration testing approved by CREST at least once a year or with major releases. This proactive approach ensures that the platform remains free from software vulnerabilities.

Transaction Authorisation Policies: Hex Trust offers users the ability to apply transaction authorization policies and custom rules, empowering them to set limits, select specific dApps and smart contracts, and more. This feature provides greater control and reduces the risk of unauthorized transactions.

Revoking Approvals: In case of identified smart contract vulnerabilities on a dApp, Hex Trust can help revoke approvals or allowances to prevent compromised dApps from accessing users' wallets and moving their assets.

Continuous Monitoring: Hex Trust employs blockchain forensics tools, including Chainalysis, to monitor and screen transactions and on-chain activities continuously. This proactive approach ensures compliance with regulations, and helps identify and prevent interactions with malicious parties. In the event of a hack, Hex Trust collaborates with law enforcement, utilizing Chainalysis' incident response retainer to recover stolen assets promptly.

Hex Trust's institutional-grade NFT custody service via Hex Safe provides a secure, compliant, and accessible way for users to confidently engage with the expanding NFT ecosystem. By leveraging Hex Trust's expertise and security measures, individuals and businesses can mitigate risks and enjoy peace of mind while participating in the NFT realm. 

For more information or to get started, contact sales@hextrust.com.

Disclaimer
This material has been prepared by the Hex Trust group (“we”, “our” or “us”). It is not directed to or construed as solicitation or advertising to any person in any jurisdiction where (by reason of that person's nationality, residence or otherwise) the publication or availability of this material is prohibited by any law. This material is not intended for any use that would be contrary to local law or regulation. Products or services mentioned in this material are subject to legal and regulatory requirements in applicable jurisdictions and may not be available in all jurisdictions. Without limiting the generality of the foregoing, we are not licensed with the Hong Kong Securities and Futures Commission to carry on business in any regulated activity under the Securities and Futures Ordinance of Hong Kong.  Accordingly, persons are required to inform themselves of and observe such laws which are in force in their jurisdictions.
Any forecasts, projections and other predictive statements are based on assumptions and expectations in light of currently available information. In addition, any forecast, projection or other predictive statement involves various risks, variables and uncertainties. Any pricing information provided is indicative only and is not intended as a recommendation or an offer or solicitation for the purchase of any digital asset, security or financial instrument, to enter into a transaction involving any digital asset, security, financial instrument or trading strategy, or as an official confirmation or valuation of any transaction mentioned in materials created or distributed by us. We make no commitment to transact at any particular price or at all, now, or in the future. These materials are informational only and do not bind us or any other entity or person in any way. No representation or warranty, express or implied, is given by any member of the Hex Trust group as to the accuracy, reliability, or completeness of the information and opinions contained herein.  You should not construe the content of any material provided as accounting, financial, legal, tax or other advice, and you should consult your own attorney, financial advisor, tax advisor, accountant or other advisor as to legal, financial, tax, accounting and other matters.
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