Institutional Custody for Tokenized Assets in LatAm

What institutional custody for tokenized assets actually means

Before allocating capital, institutional investors apply the same due diligence to a tokenized asset that they apply to any traditional instrument:

• Who holds signing authority, and how is it proven
• Are client assets segregated from the custodian's own balance sheet, with no rehypothecation
• Does a named regulator oversee the custodian, with a track record in digital assets
• Can holdings be verified independently, in real time
• How does custody hold up in an insolvency scenario

A private key is not custody. Documented, audited control is.

Why custody, not regulation, now gates institutional adoption in Latin America

Institutions evaluating tokenized instruments in the region increasingly say the same thing: a clear regulatory framework alone does not unlock allocation. What moves capital is custody infrastructure that meets international standards.

This is why Argentina's expanded sandbox and Brazil's fast growing market both benefit most where qualified custodians establish regional operations. Institutional interest tracks custody availability as closely as it tracks regulation.

Effective control: the legal definition that decides insolvency outcomes

Bermuda didn't wait for the market to ask. In February 2025, the BMA's Digital Asset Business (Custody of Client Assets) Rules came into force, mandating strict segregation between client assets and a custodian's own balance sheet, annual independent review of custody controls, and clear rules on what happens to client assets the moment a custodian defaults. Most jurisdictions are still drafting the question. Bermuda already wrote the answer, and Twin Assets is building inside that framework from day one.

The remaining gap: interoperability, not custody

Specialized custodians have closed much of the gap with regulated banking infrastructure over the past two years; several now hold national trust charters. What has not caught up is interoperability. Regulators including Singapore's MAS note that an asset tokenized on one network often cannot move easily to another, fragmenting the secondary liquidity institutions need before treating a tokenized asset as a core holding.

Five questions to ask any custodian before tokenizing an asset

1. Who holds signing authority, and how is it proven and revoked?
2. Are client assets segregated from the custodian's balance sheet?
3. What licensed regulator oversees this custody arrangement?
4. Can holdings be verified independently in real time?
5. How does custody perform in an insolvency scenario, tested against applicable law?

FAQ

What makes custody "institutional grade" for a tokenized asset?

Documented, independently reviewed control over signing authority, segregation from the custodian's own balance sheet, oversight by a named regulator, and a legal definition of control recognized in insolvency proceedings.

Is custody the main barrier to institutional tokenization adoption in Latin America?

Regulation has advanced substantially. Institutions increasingly cite custody infrastructure, not regulation alone, as the deciding factor for allocation.

What is "effective control" in digital asset custody?

A regulatory definition of who legally controls a digital asset, distinct from key possession. It determines custody treatment in insolvency and dispute proceedings.

Does Twin provide custody for tokenized assets?

Twin plans to issue tokenized assets under a Class M DABA license from the Bermuda Monetary Authority, with a custody structure designed to meet institutional standards.

This article is for informational purposes only and does not constitute legal, tax, financial, or investment advice, nor does it constitute an offer, solicitation, or invitation to purchase, subscribe for, or otherwise acquire any product or service. The custody and tokenized asset products described herein are under development and not yet available. Twin Assets tokens are intended to be offered by Twin Finance Bermuda Ltd., a Segregated Account Company incorporated under the laws of Bermuda, registration number 202403211, holding a Class M Digital Asset Business license issued by the Bermuda Monetary Authority. These assets have not been registered under the US Securities Act of 1933, as amended, or the securities laws of any other jurisdiction, and may not be offered or sold in the United States or to US persons absent registration or an applicable exemption.

Holding a Class M Digital Asset Business license does not constitute an endorsement, approval, or certification by the Bermuda Monetary Authority of any specific product, service, or custody arrangement.