Reader objective
Record who holds control and custody authority in an advisor workflow.
Possession, authority, and control
A wallet key authorizes transactions, but effective control can be distributed across multiple parties and contracts. Document who can sign, recover, rotate, delegate, upgrade, pause, freeze, or redeem. Do not compress these powers into the word “custody.”
Common operating models
| Model | Control question | Failure to plan for |
|---|---|---|
| Qualified custodian | What assets and protocols are supported? | Asset availability and transfer delay |
| Client self-custody | Who can initiate and approve? | Loss, coercion, recovery |
| Multisignature | Who are signers and what threshold? | Signer loss or coordination |
| Embedded wallet | Where are key shares and policies? | Provider dependency and recovery |
Three Bitcoin wrappers, three custody answers
The market sells all three as Bitcoin. The custody answer separates them. WBTC is one custodian: BitGo holds the underlying coins, can be compelled, and redemption runs through a merchant process. cbBTC is one issuer: Coinbase holds the Bitcoin and can freeze the token. Lombard's LBTC spreads authority across a 14-member institutional consortium. That is more distributed and still not sovereign: named institutions authorize deposits, staking, issuance, burns, and native-Bitcoin payouts, while holders retain Babylon slashing and operational dependencies. Ketju's research records those control and loss paths separately from the observed reward rate. The Atlas profiles record who controls each wrapper; research assessment, firm-shelf policy, and client selection remain separate findings.
The workflow is part of the control
Record address allowlisting, simulation, transaction review, signer separation, dollar limits, emergency pause, incident escalation, and evidence retention. A secure key attached to an informal approval process is not a complete control environment.
Regulatory posture must be checked at implementation
Custody treatment is fact-specific and may change with the account arrangement, authority, instrument, and service provider. Use current primary sources and counsel for the actual operating model. RIADeFi tracks the source layer in the regulatory ledger; it does not issue legal conclusions.
Primary and reference sources
- Investment Management — Investment Advisers · U.S. Securities and Exchange Commission