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Crypto pundit Vincent Van Code has explained why companies shouldn’t custody their XRP holdings amid the rise in treasury companies. As part of his comments, he advocated that these companies gain the token exposure to ETFs and other regulated wrappers rather than holding the coins. 

Pundit Explains Why Companies Should Avoid XRP Custody

In an X post, Vincent Van Code stated that companies accidentally turn themselves into a bank, security firm, and a regulated financial institution overnight, the moment they decide to self-custody their XRP. He further remarked that the bill for this mistake is “massive,” as it has some repercussions. 

The crypto pundit noted that most companies think that holding their own crypto tokens is the same as holding cash in a bank account. However, he explained that they are not the same as custodying XRP is one of the “most complex, expensive, compliance-heavy things” an organization can do. Vincent Van Code then used the altcoin as a case study. 

He stated that to self-custody at a large scale, companies are not just storing a seed phrase but are now operating a regulated asset environment. The crypto pundit explained that this exposes these companies to annual audits, SOC2 controls, and cold storage infrastructure. They would also have to worry about key ceremony documentation, segregation of duties, insider threat mitigation, and round-the-clock monitoring. 

Other Implications Of Custody

Vincent Van Code further mentioned that companies looking to self-custody their XRP will need incident response teams, a compliance officer, a risk team, internal policies, board oversight, and a full suite of legal and operational safeguards that they must continually maintain. He further highlighted the cost implications of implementing such safeguards. 

The crypto pundit revealed that the annual cost for a proper crypto custody program could easily hit seven figures. He noted that external audits alone cost between $250,000 and $500,000 annually, once these companies factor in SOC2 Type II, penetration testing, cyber insurance, regulatory reporting, and chain-of-custody reviews. 

Vincent Van Code also factored in staff that these companies will need to run the self-custody of their XRP assets. Meanwhile, these companies have to bear the risk and liability when something breaks, or a regulator asks questions, or the auditor finds a gap in the accounts. 

The Best Way For Institutional Adoption

Vincent Van Code stated that the real path to large-scale, multi-billion-dollar XRP adoption is not through thousands of companies holding the token. Instead, he claimed that it is through regulated wrappers, such as spot XRP ETFs and institutional treasury firms such as Ripple-backed Evernorth. 

He explained that these vehicles absorb the compliance load, audit burden, operational risk, and infrastructure costs. Vincent Van Code further remarked that they allow companies to hold XRP exposure without becoming a bank. The crypto pundit added that if mainstream enterprises are going to adopt the token globally, it will be through these structures and not DIY custody operations that could collapse under their complexity.

XRP trading at $2.27 on the 1D chart | Source: XRPUSDT on Tradingview.com

Featured image from Peakpx, chart from Tradingview.com

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