Custody Architecture
Custody is the part of the RWA stack that DeFi-native investors most often undervalue and regulated investors most often overvalue. The truth is that each custody model is appropriate for different kinds of assets and different kinds of investors. What matters is that the custody model matches the asset class and the legal wrapper.
A framework for custody
Four questions will always tell you what custody actually is:
- Who can move the asset, and under what legal authority?
- If the custodian becomes insolvent, is the asset bankruptcy-remote?
- Is there insurance, and what does it cover?
- Can the holder compel independent proof of reserves?
Self-custody
The holder holds the private keys. No intermediary. Appropriate for purely crypto-native assets where the asset is the key. Inappropriate for any claim where the asset is off-chain — because the key controls the representation, not the underlying. Self-custody of an RWA token does not give you self-custody of the underlying.
Qualified custodian
A regulated financial entity — typically a bank, trust company, or specialised custody firm — that holds the asset as a fiduciary. In most jurisdictions this is the only legally acceptable custody model for institutional capital. The custodian's balance sheet does not include the customer's assets; they are bankruptcy-remote.
Examples: State Street, BNY, Bank Frick, Sygnum, Helvetic Securgest.
MAS-licensed digital asset custodian
A newer class of custodian, licensed specifically to hold digital assets under the Monetary Authority of Singapore's Payment Services Act. Combines regulated custody with native on-chain capability. Examples: HydraX Digital Assets, Sygnum Singapore, DBS Digital Exchange.
Side-by-side comparison
| Model | Bankruptcy remote | Insurance | Regulator | Best for |
|---|---|---|---|---|
| Self-custody | N/A (holder) | No | None | Native crypto assets |
| Qualified custodian | Yes | Typically yes | Banking regulator | Physical or securities |
| MAS-licensed DA custodian | Yes | Typically yes | MAS | Tokenised securities |
What to ask the issuer
- What is the legal form of custody — bailment, trust, segregated account?
- Who are the independent auditors of the physical reserves?
- At what frequency is proof of reserves performed?
- What is the custodian's regulatory licence and supervisor?
- Is there a contractual right to physical audit by a representative investor committee?
ALKN uses a three-tier custody architecture because the asset has both a physical leg and a digital leg.
- Physical layer: 7,026,905 m of NP1 nickel wire held by Helvetic Securgest SA in a Swiss bonded vault. Quarterly independent audit.
- Legal wrapper custody: LP interest register maintained by the Alkemya Metacore SCSp transfer agent in Luxembourg.
- Digital asset custody: HydraX Digital Assets (MAS licensed) for Canton-issued ALKN; Tether Hadron technical custody for Liquid Network issuance.