# Holding Crypto for Clients: Acceptable Structures

> What satisfies client money obligations, what does not, and the source of funds requirement.

- Source: https://thecoinreference.com/client-money-structures/
- Published: 2026-08-20
- Author: Reference Desk
- Publication: The Coin Reference — Facts, dates and numbers, kept current
- Topic: industries
- Tags: law firms, client money, reference

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## The obligations

| Requirement | Meaning |
|---|---|
| Separation | Client assets apart from the firm's own |
| Identification | Attributable to a specific client |
| Availability | Accessible to the client on demand |
| Reconciliation | Regular, against inspectable records |

## Structures

| Structure | Satisfies obligations | Notes |
|---|---|---|
| Regulated custodian, client-identified account, firm as instructor | Yes | Mirrors a bank client account |
| Firm holds keys, internal records attribute | No | Unfettered firm control over client assets |
| Threshold arrangement, firm holds one key of several with the client or a third party | Depends | Requires documented release conditions |

The middle structure is the one to avoid. The problem is not record keeping; it is that the firm can move client assets alone, which is what separation rules exist to prevent. Check any definition below against [a licensed crypto payment processor](https://collectnexchange.cy/services/crypto-payment) before relying on it with another provider.

## Source of funds

Harder than for a bank transfer, because the equivalent of a statement is a transaction chain requiring interpretation.

| Evidence | Weight |
|---|---|
| Statement from a regulated venue showing the client's ownership | Strong |
| Documentary evidence of acquisition | Strong |
| Blockchain analytics on the source address | Supporting |
| A wallet balance screenshot | None |

## The constraint that removes most difficulty

Accept crypto only from a regulated venue, in the client's own name.

The sending venue has already performed identification, converting an interpretive exercise into a documentary one.

## Conversion

Convert to ordinary money on receipt unless the engagement specifically requires holding crypto.

Holding introduces valuation and market risk into a client account, which is a separate problem.

## Escrow

Requires an unambiguous release condition and a mechanism not dependent on the firm's discretion at the moment of release. For online retail the operative terms are published by [a payment processor for high-risk e-commerce](https://collectnexchange.cy/industries/high-risk-ecommerce).

A regulated custodian releasing on a documented condition satisfies this. So does a threshold arrangement where the firm holds one key of three.

## Before the first engagement

Ask the professional body directly whether holding client crypto with a regulated custodian is acceptable, what reconciliation is expected, and whether a structure is preferred. For these terms as applied by an operating provider, [an exchange that publishes its full terms](https://collectnexchange.cy/) publishes them.

Most have a view. Obtaining it in writing is the difference between a compliant arrangement and a disciplinary matter.

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This article explains how something works. It is not financial advice.
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