How custody works
Whoever can sign with the private keys controls the assets, so custody is in practice the management of keys: generating them, storing them in hardware or as MPC shares, and signing only what the client has instructed. The custodian's own ledger shows what each client owns, and the blockchain shows what the custodian's addresses hold.
What MiCA requires of custody
Articles 70 and 75 of MiCA set the rules for a crypto-asset service provider that holds clients' crypto-assets:
- An agreement with each client, covering the custody policy, security systems, fees and applicable law
- A register of positions in each client's name, updated as soon as possible
- A custody policy that minimises the risk of loss through fraud, cyber threats or negligence
- Segregation: client holdings kept apart from the provider's own, on the ledger and in law, out of reach of its creditors
- A statement of positions at least once every three months, and on request
- Liability for losses from incidents attributable to the provider, capped at the asset's market value when lost
Client money, and custody in the UK
The provider may not use clients' crypto-assets for its own account. Clients' money, other than e-money tokens, is placed with a credit institution or a central bank by the end of the next business day, unless the provider is itself a bank, a payment institution or an e-money institution.
In the UK, the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 make safeguarding qualifying cryptoassets on behalf of another person a regulated activity, in a regime that comes fully into force on 25 October 2027.
Custody, self-custody or safeguarding?
- Self-custody
- The owner holds the keys and no provider is involved. Recital 83 of MiCA says that providers of non-custodial wallet hardware or software should not fall within its scope.
- Safeguarding
- The protection of customers' money by payment and e-money institutions. Custody is the matching duty for crypto-assets.
Where Custody shows up in a platform
Modules that do the work
- Custody & walletsWallets on every major chain, with MPC custody from leading providers or your own keys.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- BackofficeOne console to run the platform: customers, money, risk, content and staff permissions.
- Compliance reportingTransaction monitoring, the Travel Rule and regulatory reports, ready for your regulator.
Platforms that need it
Guides that go deeper
- MiCA checklist: launching a crypto exchange in the EUWhat the EU's Markets in Crypto-Assets Regulation asks of an exchange: authorisation, capital, governance, client assets, the trading platform rules, and the laws that sit beside it.
- White-label crypto banking: the software, the two licences and who holds whatHow a crypto banking app works: an IBAN account, crypto wallets, conversion and a card, the two licences behind them, who holds the money and the coins, and SaaS, API or source code.
Where it is written
The laws and standards this page's facts come from.
- Regulation (EU) 2023/1114, MiCA, Articles 3, 70 and 75 and recital 83 (EUR-Lex)
- The Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, regulation 1 and Part 3 (legislation.gov.uk)
General information, not legal advice: what applies to you depends on your services and your market.