SIO-6.4 Custody of Reserve Assets
SIO-6.4.1
Stablecoin issuers must establish, maintain and implement custody policies, procedures and contractual arrangements that ensure at all times that:
(a) the reserve assets are neither encumbered nor pledged as a financial collateral arrangement;(b) the reserve assets are held with a third party i.e. a bank or an investment firm or a custodian;(c) the stablecoin issuer has prompt access to the reserve assets to meet any requests for redemption from the clients of approved stablecoins; and(d) risk of concentration of reserve assets is avoided.Added: July 2025SIO-6.4.2
The custody policies and procedures referred to in Paragraph SIO-6.4.1 must set out the selection criteria for the appointment of banks, investment firms and custodians to safeguard the reserve assets and the procedure for reviewing such appointments. Stablecoin issuers must review the appointment of banks, investment firms, and custodians for safeguarding the reserve assets on an annual basis or more frequently. For the purpose of review stablecoin issuers must evaluate their exposures to the banks, investment firms and custodians, taking into account the full scope of their relationship with them, and monitor the financial conditions of such entities on an ongoing basis.
Added: July 2025SIO-6.4.3
For the purposes of SIO-6.4.1(b) (safeguarding the reserve assets), a stablecoin issuer can (i) manage the reserve assets by holding them with a bank and an investment firm or (ii) appoint a custodian to manage the reserve assets. In either case, the stablecoin issuer is legally responsible for ensuring that the reserve assets are safeguarded appropriately and the stablecoin issuer will be subject to the regulatory requirements that are stipulated for reserve assets.
Added: July 2025SIO-6.4.4
Stablecoin issuers who issue two or more approved stablecoins must have a custody policy in place for each pool of reserve assets.
Added: July 2025SIO-6.4.5
The reserve assets must be held in custody no later than five business days from the date of issuance of the approved stablecoin.
Added: July 2025SIO-6.4.6
Stablecoin issuers must exercise all due skill, care and diligence in the selection, appointment and review of banks, investment firms and custodians of the reserve assets.
Added: July 2025SIO-6.4.7
Stablecoin issuers must ensure that the banks, investment firms and custodians of the reserve assets have the necessary expertise and market reputation to safeguard the reserve assets, taking into account the accounting practices, safekeeping procedures and internal control mechanisms of those entities.
Added: July 2025SIO-6.4.8
The appointment of custodians of the reserve assets must be done through a contractual agreement. The contractual agreement must, amongst others, regulate the flow of information necessary to enable the stablecoin issuer and the custodians to perform their functions.
Added: July 2025SIO-6.4.9
The appointed custodians must act honestly, fairly, professionally, independently and in the interest of the stablecoin issuer and its clients.
Added: July 2025SIO-6.4.10
The appointed custodians must not carry out activities with regard to the stablecoin issuer that might create conflicts of interest between the stablecoin issuer, the clients of the stablecoin issuer and themselves unless all of the following conditions are met:
(a) the custodians have functionally and hierarchically separated the performance of their custody tasks from their potentially conflicting tasks;(b) the potential conflicts of interest have been properly identified, monitored, managed and disclosed by the stablecoin issuers to their clients, in accordance with Section SIO-5.9.Added: July 2025
