Regulated Asset Safekeeping

Traditional asset ledgers require nightly batch reconciliation, a manual and error-prone process. A shared, immutable ledger provides a single source of truth for all counterparties. This automates reconciliation, reducing operational overhead and eliminating disputes over ownership or transaction history.

• Real Example: A global custodian reduced its settlement fails by over 70% by implementing a distributed ledger for corporate bond transactions, cutting millions in annual operational losses.

Manual compliance reporting is a major cost center. Programmable smart contracts can encode regulatory rules (e.g., KYC/AML, ownership limits) directly into the asset lifecycle. Every transaction, custody change, and compliance check is cryptographically recorded on an immutable audit trail, slashing the time and cost of regulatory examinations.

• Real Example: Funds using blockchain for safekeeping can provide regulators with real-time, permissioned access to transaction logs, turning quarterly audits from a multi-week manual process into an instantaneous verification.

Safeguarding private keys for digital assets (tokenized securities, CBDCs) is a critical vulnerability. Decentralized custody solutions using multi-party computation (MPC) or hardware security modules (HSMs) distributed across regulated entities eliminate single points of failure. This meets stringent security requirements while enabling faster, programmable settlements.

• Real Example: Institutional platforms leveraging MPC custody have secured billions in digital assets, providing bank-grade security without the operational risk of a single custodian holding all keys.

Blockchain safekeeping is the foundational layer for asset tokenization. By holding tokenized equities, bonds, or real estate on a programmable ledger, institutions can create new financial products like fractional ownership, automate dividend distributions via smart contracts, and enable 24/7 trading in secondary markets, opening untapped revenue streams.

• Real Example: Major banks are launching tokenized treasury bond funds, allowing for instant settlement and fractional investment, attracting a new class of institutional and retail investors.

In traditional finance, settlement can take days (T+2), exposing parties to credit and market risk. Atomic settlement via smart contracts ensures the transfer of asset ownership and payment occur simultaneously and irrevocably. This collapses settlement cycles from days to seconds, freeing up capital and drastically reducing risk exposure.

• ROI Impact: For a firm processing $10B in monthly settlements, reducing the cycle from T+2 to T+0 can free up over $650M in trapped capital, improving liquidity and reducing financing costs.

Holding assets across jurisdictions involves a web of sub-custodians, each adding cost, complexity, and opacity. A permissioned blockchain network connecting global custodians creates a unified, transparent record. This simplifies the chain of ownership, reduces fees from intermediary layers, and provides clients with real-time global visibility of their holdings.

• Real Example: A consortium of Asian custodians implemented a shared ledger, reducing the time to confirm cross-border holdings from 48 hours to near-instant, while cutting intermediary fees by an estimated 30%.

Replace manual reporting with a single source of truth. Every transaction, ownership change, and compliance check is immutably recorded on-chain. This enables:

• Real-time regulatory reporting to bodies like the SEC or FINRA.
• Dramatic reduction in audit costs and time—from weeks to minutes.
• Automated enforcement of investor accreditation and transfer restrictions.

Example: A private equity fund uses smart contracts to automatically enforce lock-up periods and accredited investor rules, eliminating manual checks and compliance errors.

Unlock liquidity from illiquid, high-value assets like commercial real estate or fine art. Tokenization enables:

• Fractional ownership, expanding the investor base and improving capital efficiency.
• 24/7 secondary markets with transparent pricing and settlement in minutes, not days.
• Programmable revenue distribution via smart contracts, automating dividend or rental payments.

Example: A real estate investment trust (REIT) tokenizes a $500M portfolio, allowing fractional investment with automated, transparent distribution of rental income to token holders.

Eliminate the traditional T+2 settlement lag and its associated counterparty risk. Blockchain enables:

• Atomic settlement (Delivery vs. Payment), where asset and payment transfer simultaneously.
• Near-instant clearing, freeing up capital trapped in the settlement process.
• Dramatic reduction in failed trades and reconciliation costs.

Example: A bond trading desk executes a $100M trade that settles atomically in seconds on a permissioned ledger, removing settlement risk and freeing capital for same-day reuse.

Provide limited partners with unprecedented transparency and control. Blockchain creates an immutable, shared ledger for fund operations, enabling:

• Real-time NAV (Net Asset Value) calculations and portfolio visibility.
• Automated capital calls and distributions via smart contracts.
• Self-service audit for LPs, reducing administrative queries by fund managers.

Example: A venture capital fund issues digital shares to LPs, who can log in to a portal and see real-time cap table updates, investment performance, and historical distributions without manual reporting.

Replace manual reconciliation with an immutable, timestamped ledger. Every custody event is automatically recorded, creating a single source of truth for auditors.

• Real Example: A private equity fund reduced its annual audit preparation time by 70% by using a blockchain-based register for LP interests, ensuring instant proof of ownership and transfer history.
• Key Benefit: Slashes compliance overhead and eliminates reconciliation disputes.

Unlock capital trapped in real estate, fine art, or private equity by representing ownership as digital tokens on a regulated blockchain.

• Real Example: A European bank launched a pilot tokenizing commercial property, enabling fractional ownership for smaller investors and generating new fee-based revenue.
• Key Benefit: Creates new product lines and democratizes access to high-value assets, turning custodial services into growth engines.

Move from T+2 settlement to near-instant atomic settlement. Assets and payment transfer simultaneously in a single, irreversible transaction.

• Real Example: A securities lending platform implemented a blockchain pilot, eliminating settlement fails and freeing up billions in capital previously held as collateral against counterparty risk.
• Key Benefit: Drastically reduces capital requirements and operational risk.

Automate dividend payments, stock splits, and voting processes. Tokenized shares enable direct, verifiable communication with shareholders.

• Real Example: A global custodian piloted a blockchain system for proxy voting, increasing shareholder participation by 40% and cutting processing costs by 60% through automation.
• Key Benefit: Enhances shareholder engagement while significantly lowering processing costs and errors.

Provide investors with a permissioned, real-time view of fund holdings and NAV calculations, building greater trust and reducing administrative queries.

• Real Example: A hedge fund administrator used a shared ledger to give LPs transparent, daily snapshots of positions, reducing monthly inquiry calls by over 50%.
• Key Benefit: Transforms client reporting from a cost center into a value-added service that justifies premium fees.

Anchor certificates of authenticity, warehouse receipts, and insurance documents for physical assets (e.g., bullion, fine wine) to an immutable blockchain.

• Real Example: A precious metals custodian created tamper-proof digital twins for gold bars, streamlining audits and enabling secure, fractional ownership proofs for collateralized lending.
• Key Benefit: Reduces fraud risk and enables new financial products against physical collateral.