Custody & Settlement

Why custody and settlement break under fragmentation

Retail-style custody and legacy settlement workflows fail institutional review, and everyone around the table knows it. Single keys, omnibus ledgers, and ad hoc approval chains leave regulators staring at operational risk. Meanwhile, token legs clear on-chain while cash crawls through ACH or SWIFT batches, forcing reconciliation teams to chase exposure. Without a shared runtime, eligibility updates, policy changes, and cash instructions diverge, driving registry drift, settlement risk, and painful audits that never seem to close.

Custody architecture inside the DALP

SettleMint's custody blueprint gives the DALP bank-grade depth:

• Key management: HSM-backed key generation, storage, and recovery across hot, warm, and cold tiers with geographic distribution.
• Policy engine: multi-party approvals, role-specific signing policies, and emergency overrides instrumented as code with full logging.
• Operational workflows: automated transaction validation, reconciliation, and reporting services that keep custody state aligned with the ownership registry.
• Servicing coverage: corporate actions, income collection, proxy voting, and tax automation run from the same service layer; current automation levels already hit 70-95% depending on the event type.
• Network flexibility: public chains, consortium validators, and private EVM networks share the same custody services, so governance and audit evidence match regardless of venue.

Custody performance snapshot

Asset servicing without spreadsheets

Corporate actions, income, and proxy voting follow deterministic workflows:

1. Action detection → notification: events publish to clients within 45-60 minutes of detection.
2. Instruction capture: investors respond through guided portals; validation enforces eligibility and deadlines.
3. Execution and reconciliation: ledger updates, custody adjustments, and documentation complete in ~18 hours, hitting <1% exception rates.
4. Evidence packs: receipts, reconciled positions, and tax artifacts append to the investor record automatically.

Automation levels already reach 80-95% across servicing categories, freeing operations teams to focus on exceptions instead of bulk processing.

Multi-signature policy fabric

The DALP standardizes signature tiers so governance is predictable:

Signature collection, transaction execution, and audit packaging are instrumented (typical execution <3 min, audit documentation ~45s), keeping both regulators and internal risk satisfied.

Settlement stack: atomic by default

The payment-rails architecture coordinates cash and tokens simultaneously:

• Settlement engine orchestrates deterministic states (initiated → reserved → executed → reversed) shared across smart contracts and the OpenAPI-defined REST APIs.
• Payment gateway adapters translate ISO 20022, SWIFT MT/MX, ACH batches, card networks, and stablecoin bridges while enforcing risk limits and sanctions screening.
• Liquidity management nets flows, optimizes routing, and surfaces queue depth and utilization metrics to operations.
• Compliance hooks screen every leg (AML, sanctions, jurisdiction) before signing anything on- or off-chain.

Failure paths are deterministic: if a rail rejects payment, the token leg aborts and reconciliation artifacts generate automatically. Success keeps cash and tokens perfectly synchronized, which means the reconciliation war room finally stays empty.

Operating model and stakeholder outcomes

• Institutions document fiduciary control with HSM evidence, policy logs, servicing receipts, and settlement proofs regulators can inspect in real time.
• Operations teams manage approvals, settlement queues, liquidity, and exceptions from one console instead of toggling between bank portals and blockchain explorers.
• Investors receive near-instant proceeds and transparent corporate-action timelines because servicing, custody, and settlement share the same data model.
• Developers automate issuance, secondary trades, redemptions, and servicing with consistent APIs, SDKs, and webhooks that expose custody state, settlement status, and audit events.

Guardrails that keep both legs in sync

1. Keys, policies, cash instructions, and compliance logic stay in one runtime; adapters connect to banks and custodians but never own business rules.
2. Wallet tiers (hot/warm/cold) and approval matrices are automated and observable, with disaster-recovery drills rehearsed on the same pipelines that run production.
3. Settlement connectors remain stateless. If a rail fails, both legs revert with reconciliation artifacts emitted automatically.
4. Lifecycle servicing (dividends, redemptions, tax) runs on the custody plane, ensuring corporate actions and entitlements always match recorded balances.

When custody and settlement operate on the DALP control plane, the platform delivers the clarity regulators expect: deterministic DvP, provable asset protection, and zero tolerance for reconciliation surprises. The calm that follows is very much the point.