# kaal:claim:3936876-012

**Claim.** Cryptocurrency exchanges store digital assets or private keys in internet connected hot storage because their main function is to provide liquidity rather than custody, unlike registered legacy stock exchanges which facilitate trading without taking custody.

**Type.** mechanism  **Support.** argued

**Holds when.**

- centralized cryptocurrency exchanges

**Source quote.**

> Because the main function of digital asset exchanges is to provide liquidity – not to provide custody - cryptocurrency exchanges typically store digital assets or private keys in hot storage, that is in wallets that are connected to the Internet.

**From.** Wulf A. Kaal, Hayley Howe, *Custody of Digital Assets* (2021), II.2.a Hot Storage, page 16

**Cite as.** Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876

**Verify.** sha256 of source PDF `9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20and%20Howe%20-%202021%20-%20Custody%20of%20Digital%20Assets.pdf

**Topics.** defi

**Keywords.** exchanges, hot-storage, liquidity, custody-mismatch

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.