Cross-Border Custody Controls

Replace days of manual reconciliation with real-time, atomic settlement. A shared, immutable ledger between custodian, sub-custodians, and the client provides a single source of truth.

• Example: A global bank reduced its cross-border settlement cycle from T+3 to T+0, freeing up billions in trapped capital and cutting operational costs by ~40%.
• Benefit: Near-instant finality eliminates counterparty risk and the need for nostro/vostro accounts.

Every transaction, ownership change, and compliance action is immutably recorded, creating a verifiable audit trail.

• Regulatory Compliance: Automatically generate reports for FATF Travel Rule, MiCA, and local jurisdiction requirements, reducing audit preparation time from weeks to hours.
• Internal Controls: Programmable multi-signature rules and time-locks enforce strict governance policies (e.g., 4-of-7 signatures for large transfers), preventing unauthorized activity.

Move beyond binary account access. Implement role-based permissions at the asset level using smart contracts.

• Real-World Application: A family office can grant its US-based investment manager access to trade equities, its Swiss custodian to hold gold, and its auditor view-only access to all assets—all within the same digital vault.
• ROI Driver: Dramatically reduces administrative overhead for permission changes and eliminates the risk of over-provisioned access.

View and manage collateral and cash positions across all jurisdictions and custodians on a single dashboard. Smart contracts can automate collateral rehypothecation and margin calls.

• Quantifiable Benefit: A hedge fund improved its collateral utilization by over 25% by pooling assets globally against liabilities, reducing the need for expensive short-term funding.
• Risk Mitigation: Real-time visibility prevents concentration risk and ensures compliance with global exposure limits.

Manual reporting for cross-border asset movements is error-prone and costly. Smart contracts encode jurisdiction-specific rules (e.g., FATF Travel Rule, MiCA) directly into asset transfers. This creates an immutable, real-time audit trail, slashing manual reconciliation. J.P. Morgan's Onyx uses a permissioned blockchain to automate compliance checks for intra-bank transfers, reducing settlement fails and audit preparation time by over 70%.

Custodying high-value, illiquid assets like real estate or private equity across borders is prohibitive. Tokenization splits ownership into digital shares, while multi-signature smart contract wallets enforce governance. This enables fractional ownership with clear, on-chain title and automated dividend distribution. Swissquote & Taurus piloted tokenized Swiss real estate, allowing international investors to hold fractional ownership with transparent, blockchain-verified custody controls, reducing entry costs by 90%.

Traditional cross-border custody relies on correspondent banking, creating settlement lag (T+2) and counterparty risk. Distributed Ledger Technology (DLT) enables atomic settlements, where asset delivery and payment occur simultaneously. This eliminates principal risk and frees up capital. The Utility Settlement Coin (USC) project, led by major banks like UBS and Barclays, demonstrated instant settlement of tokenized cash and securities, cutting settlement times from days to seconds and reducing capital requirements.

Insurers charge high premiums for cross-border custody due to opaque asset trails. A permissioned blockchain provides all authorized parties—custodian, beneficiary, auditor, insurer—with a single, immutable source of truth for asset location, ownership, and transaction history. This demonstrable control lowers insurance costs and simplifies audits. B3i (Blockchain Insurance Industry Initiative) uses DLT to create transparent records for complex, cross-jurisdictional insurance contracts, streamlining claims and compliance.

Justifying a full rollout requires clear metrics. Successful pilots focus on quantifiable KPIs:

• Cost Reduction: Lower reconciliation, audit, and insurance expenses.
• Capital Efficiency: Free up trapped capital via faster settlement.
• Risk Mitigation: Reduce operational, settlement, and compliance risks.
• New Revenue: Enable fractionalized products for new investor segments. A structured pilot with these metrics, like the Australian Stock Exchange's (ASX) CHESS replacement, provides the hard data needed for CFO sign-off on enterprise-scale investment.

The Pain Point: Custodians, sub-custodians, and asset servicers each maintain separate ledgers, leading to daily reconciliation fails, costly nostro/vostro accounts, and settlement delays.

The Blockchain Fix: A permissioned distributed ledger creates a single, immutable record of ownership and transaction history. All authorized parties see the same data in real-time, eliminating reconciliation. Example: J.P. Morgan's Onyx Digital Assets uses blockchain to settle intraday repo trades, collapsing settlement from days to minutes.

The Pain Point: Manual compilation of transaction reports for FATF Travel Rule, MiCA, or local regulators is error-prone, slow, and exposes firms to compliance fines.

The Blockchain Fix: Programmable smart contracts automatically enforce custody rules and generate auditable, timestamped reports. Regulators can be granted read-only access to a verifiable audit trail, reducing examination overhead. ROI: Estimated 60-80% reduction in manual compliance labor and associated risk.

The Pain Point: CIOs lack a real-time, consolidated view of global custody positions. This opacity hinders liquidity management and increases counterparty and operational risk.

The Blockchain Fix: Tokenized assets on a shared ledger provide instant, cryptographically verified proof of ownership and location. Treasury teams can monitor collateral and exposures in real-time. Benefit: Enables dynamic collateral management and reduces capital reserves held against settlement uncertainty.

The Pain Point: The traditional T+2 settlement cycle creates significant counterparty risk. Failed trades and manual claim processes tie up capital and administrative resources.

The Blockchain Fix: Atomic settlement via smart contracts ensures delivery of payment (CBDC or tokenized cash) occurs simultaneously with asset transfer, final in seconds. Example: The Project Guardian initiative by MAS demonstrated cross-border trading of tokenized assets with instant settlement, eliminating principal risk.

The Pain Point: Processing dividends, interest, or proxy votes across a custody chain is manual, slow, and prone to errors, leading to client disputes and missed entitlements.

The Blockchain Fix: Smart contracts automatically execute and distribute corporate action payments based on the immutable shareholder record at the snapshot time. ROI: Cuts processing time from weeks to hours, reduces errors to near-zero, and improves client satisfaction through transparent tracking.

The Pain Point: Traditional custody is a cost center with limited value-add services beyond safekeeping.

The Blockchain Fix: Tokenization and smart contracts allow custodians to offer new services: automated collateral rehypothecation, fractional ownership of private assets, and embedded compliance for DeFi yield strategies. Business Case: Transforms the custody model from fee-based storage to a platform for value-added financial engineering.