Custody of digital assets sits at the intersection of financial services law, technology operations, and client asset protection. How a custodian holds keys, segregates assets, and manages operational risk determines both its regulatory status and its liability exposure to clients. A wallet provider that controls private keys is a custodian. One that does not may still attract regulatory obligations depending on how it is designed and what it facilitates.
TLP Advisors advises custodians, wallet providers, staking operators, validators, node operators, and infrastructure providers on the regulatory perimeter, operational framework, and contractual documentation required to operate compliantly and to protect both the business and its clients.
Custody regulatory perimeter memo covering safekeeping, wallet control, private key control, omnibus wallets, segregated wallets, hosted wallets, non-custodial wallets, MPC, multisig, qualified custody, sub-custody, and outsourcing.
Custody framework documentation covering wallet governance, key management, cold storage, hot wallets, withdrawal approvals, address whitelisting, transaction signing, reconciliation, asset segregation, insurance, incident response, and client asset protection.
Wallet provider terms covering hosted wallets, non-custodial wallets, MPC wallets, transfer rules, recovery options, private key responsibility, user authorisations, fees, sanctions screening, suspicious activity, suspension, and termination.
Staking regulatory analysis covering validator services, staking-as-a-service, liquid staking, delegated staking, restaking, reward distribution, slashing, custody, client asset treatment, yield disclosures, and licensing triggers.
Staking terms and disclosures covering validator selection, delegation, reward calculation, fees, slashing risk, lock-up periods, unstaking periods, network risk, smart contract risk, validator downtime, and tax coordination.
Infrastructure provider agreements covering node operations, validator services, oracle services, bridge services, indexing, RPC services, API access, uptime, security, liability, service credits, data use, and regulatory cooperation.
Security and operational resilience policy covering private key controls, access management, cybersecurity, penetration testing, vulnerability remediation, smart contract audits, business continuity, disaster recovery, incident reporting, and vendor oversight.
Blockchain analytics and transaction monitoring framework covering wallet screening, sanctions exposure, mixer exposure, darknet exposure, bridge flows, typology rules, alerts, escalation, case management, suspicious activity reporting, and regulator reporting.
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Custody, staking and wallets, answered
Questions we work through with custodians, wallet providers, and staking operators.
Yes, in most cases. Holding private keys or controlling wallets on behalf of clients is generally treated as a regulated custody activity. Non-custodial wallets, where the provider has no access to private keys, may fall outside the custody perimeter, but the analysis depends on the specific design.
In omnibus custody, client assets are pooled in shared wallets with entitlements recorded in an internal register. In segregated custody, each client has dedicated wallets. Segregated custody provides stronger client asset protection in insolvency but is operationally more complex.
It depends on the structure. Where a platform controls staked assets, distributes rewards, and manages validator selection on behalf of clients, this is likely to attract custody and possibly investment management licensing requirements. Liquid staking involving the issuance of a receipt token introduces additional classification questions.
Licensed custodians and wallet providers are subject to AML/CFT obligations including customer due diligence, transaction monitoring, sanctions screening, suspicious activity reporting, and travel rule compliance.
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