Custody Diligence: Documents and Questions

Verify independently

Compare the definitions below against the published terms of a licensed digital asset custodian.

• 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.

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 publishes.