By Shane Ian Murphy, Co-Founder and Partner of Tri-Party Tokenisation
Custody is sometimes treated as a box to tick before a real-world asset token is issued. A document is received, the location is recorded and the process moves on. That approach is too static. If a digital record continues to refer to a physical or financial asset, the evidence connecting the two must remain current throughout the relevant lifecycle.
This does not mean putting confidential custody documents on a public blockchain. It means establishing a controlled process for confirming what is held, where it is held, who has authority over it and when the information was last verified.
A custody confirmation needs context
A useful custody record should allow an authorised reviewer to understand the asset identifier, quantity or relevant description, location, date of confirmation, responsible custodian and the authority of the person issuing the record. Depending on the asset, it may also refer to insurance, inspection, assay or warehouse information.
The record should also make its limits clear. A custody confirmation is not automatically a valuation, proof of legal title, regulatory approval or promise of liquidity. Those are separate questions requiring separate evidence.
What can make evidence stale?
Custody evidence can become outdated even when the asset has not been sold. Relevant events may include:
- movement between facilities or changes within the storage location;
- a change in custodian, authorised signatory or control instructions;
- a new inspection, assay, reconciliation or condition report;
- expiry or amendment of insurance or storage arrangements;
- a dispute, lien, legal instruction or restriction affecting the asset;
- a discrepancy between physical records and the digital token register.
A robust process should define which events require immediate notice, which records have an expiry or review date and who is responsible for updating the tokenisation file.
Digital references should support reconciliation
A token record can contain a reference to an approved asset file, document identifier or cryptographic fingerprint. This can help demonstrate that a particular version of a document was used. It does not independently prove that the document was accurate when issued or that the asset remains unchanged.
That is why reconciliation matters. The on-chain position, custody statement, ownership evidence and operating ledger should be compared at defined points. If they do not agree, transfers or further processing may need to pause until the discrepancy is resolved.
A hypothetical commodity example
Consider a hypothetical quantity of copper powder held in a secure facility. An initial custody confirmation might identify sealed lots and refer to an assay. If the lots are moved, sampled again or placed under a new control instruction, the earlier evidence may no longer describe the complete current position. The digital record should point reviewers toward the latest authorised information and preserve the history of earlier versions.
This example does not imply that the commodity is approved for sale, has a guaranteed valuation or can be converted into liquidity. Token issuance, custody, market acceptance and financing are distinct stages.
Custody is an ongoing responsibility
The OECD’s work on tokenisation highlights the importance and changing role of custody within tokenised markets, as well as legal, operational and market-development challenges. The practical lesson is straightforward: the strength of a tokenised structure depends not only on what was checked at the beginning, but on how changes are governed afterwards.
As co-founder and partner of Tri-Party Tokenisation, my focus is on keeping the asset, documentation and digital record connected. Current custody evidence is part of that discipline. It helps authorised parties understand whether the tokenisation record still reflects the asset position it was designed to represent.
Note: This article is educational. It does not describe a public offering, completed transaction, regulatory approval, investment return or guaranteed market.
