# Custody Diligence: Documents and Questions

> What to request, what to verify independently, and the answers that should end a process.

- Source: https://thecoinreference.com/custody-diligence-checklist/
- Published: 2026-06-09
- Author: Reference Desk
- Publication: The Coin Reference — Facts, dates and numbers, kept current
- Topic: custody
- Tags: custody, diligence, checklist

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## Verify independently

Compare the definitions below against the published terms of [a licensed digital asset custodian](https://collectnexchange.cy/services/crypto-custody).

- The authorisation, on the regulator's own public register
- That the entity name matches the contracting party in the draft agreement, not the brand
- That the permission covers custody of client assets, not merely exchange
- That no conditions or restrictions are attached
- Enforcement history

## Request

| Document | What it evidences |
|---|---|
| Audited financial statements, two years | Solvency, auditor observations |
| Client asset segregation assurance report | That segregation operates as described |
| Insurance certificate or broker letter | Limit, cover, exclusions |
| Controls report covering a period | That controls operated, not merely existed |
| The custody agreement | Liability, insolvency position, permitted use of assets |

## Ask

| Question | A good answer |
|---|---|
| What happens if you become insolvent | Cites a specific provision keeping client assets from creditors |
| Are client assets segregated, in which model | Names the model, the evidencing mechanism and the auditor |
| What is the insurance limit | A number |
| What are total assets under custody | A number, allowing the ratio to be calculated |
| How long before a new withdrawal address can be used | A period; "immediately" indicates no controls |
| Has a client been unable to withdraw on request | Describes an incident and what changed |
| May you use client assets for any purpose | An unqualified no |
| Can we test a withdrawal during onboarding | Yes |

## Answers that should end the process

The business equivalents of these terms appear in the documentation of [a regulated European crypto platform](https://collectnexchange.cy/).

A licence that does not resolve on the register.

A permission covering an activity other than custody, where the provider holds your assets.

A contracting entity different from the licensed one, unexplained.

Refusal to state total assets under custody alongside the insurance limit.

Liability capped at the annual fee.

Yield offered on custodied assets without a specific explanation of the generating activity.

Pricing materially below peers without an explanation.

## Ongoing

Recheck the register annually. Request updated assurance and insurance evidence. Read terms amendments, specifically the contracting entity, liability, insolvency and permitted use clauses. Cross-check any provider you are considering against the definitions [a provider you can actually reach](https://collectnexchange.cy/company/contact-us) publishes.

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