Glosarium

Trust

Easy

A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, t

What Is a Trust?

A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts are established to provide legal protection for the trustor’s assets, to make sure those are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes. A trust is a legal entity employed to hold property, so the assets remain in a safe environment. 
Some cryptocurrency investors also choose to keep their assets in a trust because they are further protected from some of the risks associated with traditional services. Trusts are also used for an added layer of protection and privacy.
In the digital economy, many trust companies are able to provide institutional-grade custodial controls for a variety of assets, including additional security and protection from counterparties, hacking, and theft, as well as provide greater transparency and reporting. Trust companies are hired to act as fiduciaries, and hence, they can make all of the investment decisions and work in the best interest of its client. This is helpful to those who are inexperienced and lack knowledge of the digital economy.

Author:

Gunnar Jaerv is the chief operating officer of First Digital Trust — Hong Kong’s technology-driven financial institution powering the digital asset industry and servicing financial technology innovators. Prior to joining First Digital Trust, Gunnar founded several tech startups, including Hong Kong-based Peak Digital and Elements Global Enterprises in Singapore.