Cyber security – the thorn in the crypto rose

Every rose has thorns, and as crypto blossoms into an institutional flower, cyber security’s sharp in everyone’s minds at London’s buzzing Digital Asset Summit.

Dmitry Tokarev, the outspoken CEO of Cooper.io – a leading institutional custodian specialist – as the industry approaches a $3tn valuation, Tokarev sat down for a fireside chat to discuss the state of cyber security in the crypto space.

“Security is needed to secure all the value [in crypto], but its not kept up,” explained the CEO as he captured a snapshot of an emergent industry caught in the perilous transition between excitement and sensibility.

With many anticipating serious regulatory moves coming out of 2022 as global financial watchdogs turn their attention to consumer protections, Tokarev speculates that “a consistent and compliant” industry will develop out of the embers of the next bear market.

Driven in part by heavy losses anticipated in digital assets such retail investment in Shiba Inu (SHIB) and other more informal meme-coin assets.

Three pillars of risk in crypto cybersecurity

Tokarev was quick to identify what he considers to be the three pillars of risk to institutions involved in digital assets.

“The three pillars of risk – cyber, email, and fraud” are underappreciated when businesses conceptualise cyber security as a “solvable problem”.

“The question is of when not if,” he explained while discussing the threat possessed from increasingly sophisticated cyber criminality – especially stemming from the North Korean regime – which has piloted attacks that aren’t immediately weaponised.

He further pointed the fingers at regulators for creating a merciful environment in which fraudsters are able to get away with their crypto crimes, creating an alluring cottage industry in rug-pulled ICOs and careful social engineering.

Centralised institutions have a role

Looking to the future, the Copper.io CEO explained that there was a big problem emerging around the philosophy of self-custody of digital assets. Indeed, Dmitry was keen to present the view that there is a role for centralised institutions to fill.

His main concern seems to be around the protection and loss of private keys – something he suggests will emerge as a huge problem in the future.

The CEO identified a level of hype around the philosophy of self-custody, and insisted there was a balance to be struck between free market ownership and investor protections, and this involves overcoming mistrust in TradFi and creating a genuine role for Wall Street in developing decentralised infrastructure.

Tokarev highlights this as the crash-end of the current bull run as a key regulatory moment that could see the onus of regulator concerns passed down onto authorised participants such as large centralised exchanges as gatekeepers for retail level digital asset products.