Digital asset custody: what institutions should ask first

Institutional interest in digital assets tends to begin with strategy and end at custody. It is more productive to begin at custody, because the custody arrangement constrains what strategies are available at all.

The operative question is who holds the keys and under what legal arrangement. Self-custody, qualified custodian and exchange-held balances are three different risk positions, and only one of them is bankruptcy-remote in most jurisdictions.

Segregation matters as much as security. Assets held in an omnibus arrangement may be technically secure and still be commingled as a matter of law, which is a different exposure from theft and is not addressed by better cryptography.

Finally, reporting. A position that cannot be independently verified on-chain by the client is a position the client is taking on trust. Verification should be a standing capability, not a request.