Custody
Also: Digital asset custody · Qualified custodian
Holding the keys that control an asset on someone else's behalf — which in practice means holding the asset, whatever the account statement says.
Control of a private key is control of the asset. Custody is therefore not a records-keeping service but the whole of ownership delegated to a third party, and the legal wrapper around it decides what happens when that party fails.
The distinction that decides everything
- Segregated holdings, where assets are identifiable as yours and sit outside the custodian's estate in an insolvency.
- Omnibus holdings, where client assets are pooled and you hold a claim against the custodian rather than the asset itself.
The difference is invisible on a dashboard and total in a bankruptcy. It is the first question an allocator asks and the last one a retail interface mentions.
Where the risk actually concentrated
Not in the technology. A handful of custodians now sit behind a large share of institutional holdings and of listed vehicles, which means an operational failure at one propagates through products that appear unrelated to each other. Diversifying across funds does not diversify custody if the funds share a custodian.
An exchange leaving a jurisdiction does not close the question either: the assets remain somewhere, under someone's control, governed by a document most holders have not read.