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The Australian Securities Exchange (ASX) has issued a warning to investors keen to buy into the crypto scene, particularly around the security of the private keys used to access digital funds.
In a submission [PDF] to the committee considering Australia as a Technology and Financial Centre , the ASX said it would be worth considering whether investors understood the risks and benefits of owning digital assets through a custodian or an exchange operating as a custodian.
Digital assets are associated with a user through an address, with the “owner” being the one with the address.
“The user’s address is a mathematical derivation of their private key, which in turn is derived from a random seed. The user must keep their random seed secret to prevent other users from deriving their private key and accessing the address associated with their digital assets,” the ASX explained.
“In effect, access to the private key of an address will confer custody of the underlying assets in that address. In that sense, access to the private key can be likened to legal title.”
See also: We’re not flying to Mars: ASX on using distributed ledger for new CHESS system The ASX added it was concerned that many users […]