Governance Arrangements for Virtual Asset Custodians
154) From a governance perspective, an Authorised Person Providing Custody in relation to Virtual Assets should have proper governance structures in place to avoid or mitigate actual or potential conflicts of interest between its custody functions and any other activities or functions within itself or with other Group entities. Such governance arrangements may include having a separate team, which does not have other conflicting responsibilities within the firm, handling custody.
155) To assist with ring-fencing and to reduce potential conflicts of interest, an Applicant that wishes to Provide Custody in relation to Virtual Assets and concurrently provide other Regulated Activities should consider the merit of establishing a separate, standalone legal entity for its Virtual Asset Custodian activities.40 If so established, this standalone entity would need to apply to the FSRA for its own FSP to carry on the Regulated Activity of Providing Custody.
40 For example, a Virtual Asset Exchange may decide to offer a dedicated Accepted Virtual Asset custody service to certain Clients.