Asset Segregation

Asset segregation refers to the legal and operational separation of client crypto-assets and funds from those belonging to a crypto-asset service provider itself, ensuring client protection in the event of insolvency or creditor claims.

Under Article 70 and 75 of MiCA, CASPs must keep client digital assets in distinct wallets separate from company holdings, maintain an up-to-date register of positions mapping each client's entitlement, and prohibit using client assets for the CASP's own account. This ensures that in insolvency, client assets remain protected and creditors have no recourse to them.

The segregation requirement mirrors protections under MiFID II for securities and the FCA's client asset rules in the UK, extending institutional-grade safekeeping standards to digital assets. Proper asset segregation requires robust operational controls including daily reconciliation of client positions, designated wallet infrastructure preventing commingling, audit trails documenting asset movements, and governance procedures preventing unauthorized use of client holdings. Violations of segregation requirements can result in regulatory sanctions, license revocation, and civil liability for losses to client assets.