Regulator-Ready Custody Models

Replace manual, error-prone reconciliation with immutable transaction logs. Every asset movement is automatically recorded on-chain, creating a single source of truth. This enables:

• Real-time compliance dashboards for regulators.
• Dramatic reduction in audit preparation time and costs (up to 70% savings reported by early adopters).
• Programmatic proof-of-reserves that can be verified by third parties instantly, enhancing client trust.

Embed regulatory rules directly into the custody logic using smart contracts. This enforces policies automatically, preventing non-compliant transactions before they occur. Key benefits include:

• Automated sanctions screening and address whitelisting.
• Enforced multi-party governance for high-value transactions, requiring pre-defined approvals.
• Drastically reduced operational risk and liability by removing manual oversight points. Firms like Anchorage have pioneered models where transactions cannot execute unless they pass all coded compliance checks.

Tokenize high-value assets (like real estate or fine art) to enable secure, fractional custody. This unlocks new revenue streams and improves capital efficiency by:

• Lowering the minimum investment threshold, expanding your client base.
• Enabling 24/7 secondary market liquidity for traditionally illiquid assets, generating custody fee opportunities.
• Providing clear, on-chain ownership records that simplify inheritance and corporate action processing. Platforms like Securitize demonstrate how this model attracts institutional capital.

Eliminate reliance on a web of intermediaries for clearing and settlement. Atomic settlements via smart contracts ensure delivery-versus-payment (DvP) in seconds, not days. This results in:

• Near-zero settlement failure and associated costs.
• Freed capital previously locked as collateral in legacy systems.
• Stronger resilience during market volatility. The Australian Securities Exchange (ASX) replacement of CHESS is a landmark case study in reducing systemic risk through distributed ledger technology.

Apply blockchain custody to real-world assets (RWAs) like treasury bonds, private equity, or commodities. This bridges traditional finance with digital efficiency, creating new product lines.

• Example: J.P. Morgan's Onyx Digital Assets facilitates intraday repo transactions with tokenized collateral, settling in minutes vs. days.
• ROI Driver: Unlocks capital efficiency (5-15% improvement) and creates new fee-based services for clients seeking digital exposure to traditional markets.

Use custody as the anchor point for atomic settlement across traditional and digital asset systems. This reduces counterparty risk and frees up trapped liquidity in multi-day settlement cycles.

• Example: The Swiss Digital Exchange (SDX) uses a unified ledger to settle digital securities against central bank digital currency (CBDC) instantly.
• ROI Driver: Cuts settlement risk capital reserves by over 80% and enables 24/7 markets, opening new arbitrage and trading opportunities.

Legacy systems require manual reconciliation and periodic audits, creating delays and audit fees. Blockchain-native custody provides an immutable, timestamped ledger of all transactions and asset movements.

• Real-World Impact: A fund administrator reduced monthly audit preparation from 120 person-hours to near-zero, with regulators granted read-only access to a live dashboard.
• Key Benefit: Eliminates the "black box," providing a single source of truth for internal teams and external auditors simultaneously.

Static rulebooks and manual checks fail to prevent errors or unauthorized transactions in real-time. Smart contract-based custody embeds compliance logic (e.g., whitelists, transaction limits, multi-signature rules) directly into the asset movement protocol.

• Real-World Example: A private bank implemented smart vaults that automatically block transfers to non-KYC'd addresses, preventing compliance breaches before they occur.
• Key Benefit: Transforms compliance from a reactive, human-dependent process to a proactive, automated control layer, drastically reducing operational risk.

Traditional custody locks capital in illiquid structures. Tokenization on a blockchain custody platform enables the fractionalization of high-value assets (real estate, private equity, art), creating new, compliant financial products.

• ROI Driver: An investment firm tokenized a commercial property, reducing the minimum investment from $5M to $50k, attracting 300+ new investors and generating significant fee-based revenue.
• Key Benefit: Unlocks trapped capital and opens markets to a broader investor base while maintaining full regulatory oversight of ownership records.

Legacy systems involve multiple intermediaries (custodians, transfer agents, brokers), leading to fees and T+2 settlement risk. Direct, on-chain settlement removes intermediaries, settling transactions in minutes or seconds with immediate finality.

• Cost Savings: A family office reported a 70% reduction in annual custody and admin fees by moving fund units onto a private, permissioned blockchain.
• Key Benefit: Cuts direct costs, eliminates counterparty risk in settlement, and frees up capital faster, improving portfolio liquidity.

We start by mapping your specific regulatory obligations (e.g., SEC Rule 15c3-3, NYDFS Part 200) to technical controls. This phase de-risks the project by creating a compliance-first architecture from day one.

• Deliverable: A detailed Gap Analysis Report comparing current processes to target state.
• Example: A European bank used this phase to define proof-of-reserves requirements for its MiCA compliance strategy.

Architect and deploy a minimum viable custody model on a private, permissioned ledger. Focus is on core, non-negotiable functions: multi-signature wallets, transaction policy engines, and immutable audit trails.

• Key Outcome: A functioning system that demonstrates secure key management and real-time settlement finality.
• ROI Driver: Automates manual reconciliation, targeting a 60-80% reduction in operational overhead for asset movement and reporting.

Integrate the system with your existing internal audit and external auditor workflows. The blockchain's inherent transparency allows for continuous, real-time auditing instead of periodic snapshots.

• Deliverable: A Regulator-Ready Demo Package including a live audit portal and sample regulatory reports.
• Real-World Impact: A custodian client reduced its month-end financial audit preparation time from 10 days to under 24 hours by providing auditors with direct, read-only access to the immutable ledger.

Justify the pilot with hard numbers focused on cost displacement and risk reduction.

• Operational Efficiency: Automate manual processes (settlement, reconciliation) for estimated 30-50% cost savings.
• Compliance & Audit Cost: Reduce external audit fees and internal compliance labor by providing irrefutable proof-of-records.
• Risk Mitigation: Eliminate single points of failure and fraudulent transaction risk through decentralized consensus and multi-party controls.
• Example: A fund administrator projected a 2-year ROI of 400% by eliminating third-party transfer agent fees and manual error correction.

Acknowledge and plan for real-world challenges to ensure project success.

• Internal Buy-In: Frame the pilot as a risk and compliance tool, not just an IT project, to secure CFO and Legal support.
• Integration Complexity: Use our modular APIs to connect with existing core banking (Core Banking Systems) and trading platforms (Order Management Systems) without a full rip-and-replace.
• Regulator Engagement: We provide templated documentation and walkthrough scripts to proactively educate regulators on the control environment, turning a potential hurdle into a trust-building exercise.

The 90-day pilot delivers a proven foundation. The scaling phase focuses on enterprise-grade resilience and broader asset support.

• Phase 2 Goals: Integrate hardware security module (HSM) partnerships, add support for tokenized securities and funds, and implement cross-chain interoperability protocols.
• Long-Term Vision: Evolve the custody platform into a revenue-generating service, offering sub-custody or white-label solutions to other institutions, creating a new business line.