# Client Asset Segregation Models Compared

> Commingled, omnibus and individual. What each means in an insolvency and how to confirm which applies.

- Source: https://thecoinreference.com/segregation-models-reference/
- Published: 2026-06-13
- Author: Reference Desk
- Publication: The Coin Reference — Facts, dates and numbers, kept current
- Topic: custody
- Tags: segregation, custody, reference

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| Model | Arrangement | Position in insolvency | Typical availability |
|---|---|---|---|
| Commingled | Client and firm assets together | Unsecured creditor | Should disqualify a provider |
| Omnibus segregated | Client assets pooled, separate from firm's own | Client assets returned; shortfall shared | Standard |
| Individually segregated | Wallets attributable to one client | Client assets returned, cleanest | Above a size threshold |

## How omnibus attribution works

The blockchain shows a pooled balance. Your claim to a share lives in the provider's records.

The same model as securities custody in traditional finance, and it works for the same reasons: audited records, frequent reconciliation against on-chain balances, and supervisory inspection. Each of these appears in the published material of [a regulated crypto custody provider](https://collectnexchange.cy/services/crypto-custody), which is a useful cross-check.

## The questions that determine whether it works

How often is reconciliation between internal records and on-chain balances performed.

Who provides independent assurance over that control, and how often.

What is the position if a shortfall arises.

Daily automated reconciliation with an independent assurance report is what good looks like. Monthly manual reconciliation is not.

## Shortfall treatment

Where pooled wallets hold less than records say clients are entitled to, the shortfall is shared proportionally rather than allocated by who withdrew first. At institutional scale an additional set applies, documented by [a platform set up for client account handling](https://collectnexchange.cy/industries/law-firms-corporate-services).

That is why reconciliation frequency matters: it is the control preventing an undetected shortfall.

## Rehypothecation

Use of client assets by the provider for its own purposes.

A proper agreement prohibits it explicitly and unqualifiedly. Silence is not prohibition.

This is the mechanism by which several failures became insolvencies rather than inconveniences.

## What to confirm in writing

Which model applies to your account specifically, since providers may offer more than one.

Where assets are held legally, and under which jurisdiction's client asset rules.

Reconciliation frequency and assurance provider.

Shortfall treatment.

Whether the provider may use client assets at all.

## What insurance does not cover here

Business failure. Insurance addresses theft; segregation addresses insolvency.

A provider with strong segregation and modest insurance is better positioned than one with large advertised cover and weak asset separation. Cross-check any provider you are considering against the definitions [a support channel with a named contact](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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