Custody and settlement of tokenised assets.

With a tokenised security, custody shifts from a bookkeeping entry at a bank to managing a cryptographic key that grants access to the token. An investor could manage that key themselves, but in practice almost every regulated issuance uses an external custodian who manages the keys on the client's behalf, comparable to a traditional securities custodian.

Regulated custodians must meet strict requirements around segregating client assets, internal controls and insurance against theft or loss of keys. That is a deliberate choice: self-custody of a private key is irreversible upon loss, whereas a classic securities account can be restored through the bank or notary.

Some structures use multi-signature setups where several parties must jointly approve a transaction, reducing the risk of a single compromise while slightly slowing settlement.

The classic principle of delivery-versus-payment (DvP), where a security only changes hands once payment happens simultaneously, remains the starting point with tokenisation too. On a blockchain this can be enforced via an atomic swap: a smart contract executes the transfer of the security token and the payment token within the same transaction, so neither party can end up without the other.

This works most convincingly when both the security and the money live on the same blockchain, for example when a bank uses its own tokenised deposit or a digital central bank currency for the cash leg. When payment still runs through a classic banking system while the security sits on the blockchain, true atomic DvP is not possible and an intermediary must bridge the time gap, reintroducing part of the classic counterparty risk.

In the classic securities chain, a central securities depository (CSD) records who ultimately owns which security and handles settlement between banks and brokers. With tokenisation, some CSDs try to keep that role by offering a blockchain infrastructure themselves, keeping the official ownership register digital while staying compatible with existing law.

Other initiatives let the blockchain itself act as the ownership register, outside the classic CSD structure. That can be faster but requires an explicit legal basis to count as a valid ownership register. Within the DLT Pilot Regime this is one of the core questions: how far can a market infrastructure deviate from the classic CSD role.

Even in a fully tokenised chain, banks remain relevant, partly because they handle the fiat leg of transactions, identify clients under anti-money-laundering rules and often act as custodian for institutional clients themselves. A number of large banks are building their own tokenised deposit systems precisely to deliver on the DvP promise without depending on an external stablecoin issuer.

For investors this means 'blockchain' does not automatically remove intermediaries; it mainly changes which intermediaries are needed and how fast settlement happens after a transaction.