Stablecoin Glossary
Custodian Bank
A custodian bank is a regulated banking institution that safeguards financial assets or cash on behalf of a client, which can include assets forming part of a stablecoin reserve.
Explanation
Stablecoin issuers can use banks and other qualified custodians to hold deposits, securities, or other reserve assets. The custody arrangement determines where assets are held, how ownership is recorded, who can move them, and what protections apply if the issuer or custodian fails. Reserve frameworks increasingly address segregation, safekeeping, concentration, and the legal availability of reserve assets for redemption.
Why it matters
Custody structure affects operational risk, legal segregation, counterparty exposure, and the practical availability of assets during redemptions.
Example
An issuer may hold Treasury securities through a regulated securities custodian and cash deposits at one or more banks.
Related terms
Last reviewed: September 2026