A custodial receipt is a usually non-transferable receipt that represents securities held by a custodian. It denotes that the depositor has ownership of the asset or security held in custody. These receipts are commonly used for stocks and bonds, but also for high-value assets such as gold, diamond or cryptocurrencies.
You may think that there is little risk of fraud in such receipts, but have you considered that high wealth individuals often borrow against their custodial receipts, using a portfolio line of credit (PLOC)? The PLOC is a collateralized loan against select investments from a person’s portfolio. The lender allows the individual to take out a loan by holding a specific percentage of the portfolio’s value as collateral.
NextCert can produce custodial receipts in the form of certificates which are tamper-proof and impossible to fake. These certs could represent gold bars, diamonds, or other financial assets which are held by custodians. The certificates themselves can be easily verified by relying parties and used to pledge collateral for PLOC loans. Potentially, they could also be used in DeFi investments.
