What is ‘custody’ and how does it relate to fiduciaries? ‘Custody’ is defined in different ways, depending on its purpose. At its core, custody relates to an arrangement under which an asset is recognised as being owned, or otherwise possessed by a person, on the person’s own behalf or on behalf of another. A key priority of a custodian is to safeguard an asset from being stolen and to provide a mechanism for transferring the asset. Before allowing a financial asset to be transferred from a custodial account, a custodian ordinarily requires evidence that the person directing the transfer has authority to do so. A custodian will need procedures for extraordinary events, such as how to comply with a court order to stop an asset from being transferred.

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Jesse Kanach ‘Crypto Fundamentals’, Trust Quarterly Review (Vol16 Iss3), pp.12-19.