4. Custody and Asset Safeguarding: Where Are Your Tokens Held?

Understanding where and how your assets are stored can make a meaningful difference. While Coinut adheres to MAS requirements to keep client assets separate from company funds and to apply safeguarding measures, some DPTs may be held with third-party custodians.

These custodians could be located in jurisdictions outside of Singapore, which means that if issues arise, recovery processes may follow foreign legal frameworks. This can introduce delays or limitations in resolution.

It’s also important to note that DPT holdings are not covered by any deposit insurance schemes. This differs significantly from traditional bank accounts, where such protection is standard.

At Coinut, transparency is a key part of how we operate. We believe you deserve to know where your assets are stored and the safeguards that are in place.

Cryptocurrency is custodised using a range of methods and service models designed to securely store and manage digital assets, primarily by safeguarding the private keys that control access to those assets. Here’s how crypto custody works:

Main Custody Models

1. Self-Custody

You may hold and manage your own private keys, typically using personal digital wallets (software, hardware, or paper wallets).

This model gives full control and responsibility to the owner, but also exposes them to risks of loss, theft, or mismanagement if keys are lost or compromised.

2. Third-Party Custody

A specialized custodian (such as a crypto exchange like Coinut, bank, or dedicated custody provider) holds the private keys on your behalf.

These custodians use enterprise-grade security measures, including cold storage (offline wallets), multi-signature (multisig) arrangements, and insurance coverage (in some instances) to protect assets.

Third-party custody is popular with larger customers and those who prefer not to manage their own keys, but it introduces counterparty risk, and if the custodian is hacked, assets could be lost. 

3. Hybrid and Partial Custody

Combines elements of self-custody and third-party custody, such as multisignature wallets or secure multiparty computation (MPC), where multiple parties share responsibility for authorizing transactions.

These solutions are often used for joint accounts or to reduce single points of failure.

4. Legal and Regulatory Considerations

In many jurisdictions like Singapore, custodians are required to segregate client assets from their own, ensuring that clients retain ownership even if the custodian becomes insolvent.

Some custodians operate under trust structures or similar legal frameworks to provide additional protection for clients’ assets.

5. Custody Storage Methods

Method	Description	Security Level	Typical Use Case
Hot Wallet	Connected to the internet for easy access and trading; more vulnerable to cyber attacks	Lower	Active trading, small balances
Cold Wallet	Offline storage (hardware or paper wallets); highly secure but less convenient for frequent use	Higher	Long-term holding, large sums
Warm Wallet	Intermittently connected to the internet; balances security and accessibility	Medium	Occasional access needed