Clear DefinitionsQualified Custodian
1 min read
Pronunciation
[kwol-i-fyd kuh-stoh-dee-uhn]
Analogy
A qualified custodian is like a chartered bank authorized to hold client funds under strict regulation.
Definition
A custodian meeting regulatory standards (e.g., SEC Rule 206(4)-2) to hold client assets with required controls, audits, and insurance.
Key Points Intro
Qualified custodians ensure compliance via:
Key Points
Regulatory approval: Licenses under relevant authorities.
Segregated accounts: Client assets separated from firm’s.
Periodic audits: Independent verification of holdings.
Insurance and bonding: Protection against custodian default.
Example
Anchorage Digital is a qualified custodian for US institutional crypto assets, complying with OCC and SEC guidelines.
Technical Deep Dive
Qualified custodians implement control environments per SOC 1/2, maintain segregated client accounts on-chain, provide monthly NAV statements. They undergo ITGC and transaction testing audits annually.
Security Warning
Regulatory changes can affect custodian status and service continuity.
Caveat
Qualification varies by jurisdiction; verify local regulatory recognition.
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