What Is the Role of a Custodian in a Traditional OTC Transaction versus a Blockchain Transaction?

In a traditional OTC transaction, a custodian is a financial institution that holds a client's securities and other assets to minimize the risk of theft or loss. In a blockchain transaction, the role of a custodian is often minimized or replaced by the smart contract itself, which programmatically manages the collateral and asset transfer.

However, for tokenized real-world assets, a custodian may still be required to hold the underlying physical asset, while the smart contract holds the digital token.