Custody in Digital Finance

What is crypto custody?

Custody in traditional finance usually begins with an institution.

In that model, banks, brokers, and trust companies manage money movement from the start of a transaction until the funds settle in a user’s account. Customers may own the asset on paper, but in traditional finance, the institution controls how assets move through the financial system.


Crypto custody works differently. In traditional finance, custody means a regulated institution holds assets on your behalf and a chain of institutional records determines who owns what. Control in crypto is based on cryptographic authorization instead. A blockchain does not check in with a bank before moving assets. It verifies whether a transaction was signed with the correct credentials. These credentials provide cryptographic authorization to approve onchain money flows.


In crypto, we call these credentials private keys. Private keys are long alphanumeric values that prove control over assets and authorize their use onchain.

Any party that produces a valid signature with a private key has practical control over the asset, regardless of what any legal agreement says. If the signature is valid and the network accepts the transaction, the asset moves.