Custodian services give issuers and investors alike confidence the assets are managed securely.
These services will manage the keys and operations of the wallets, escrow services during the issuance, cold wallet storage, cash distribution and other operations. In some cases an institutional investor handling large amount of tokens may mandate a third-party to manage its digital assets.
It is important to understand that security tokens are secure and cannot be lost by investors, even if they don’t use custodian services. If they lose the key to access their tokens, a specific request to the issuer can be done to burn (destroy) the lost tokens and to allocate new ones to a new wallet held by the investor. Unlike cryptocurrencies working in a decentralized way, security tokens are issued by a single legal entity that is responsible for the good management of the securities. Technically, the issuer will retain the possibility to create/destroy tokens at any time.