Every custody disaster in the world crypto-asset market began with the same defect: client assets were mixed with the exchange own assets and then used for the exchange own business. The pilot framework in Resolution 05/2025/NQ-CP blocks that defect at the first custody principle: client assets must be segregated from the service provider own assets and must not be used for the provider own activities. This article analyses how segregation must work in books and wallets, how client assets are treated if the custodian becomes insolvent under Recovery and Bankruptcy Law 142/2025/QH15, and the cold-wallet, insurance and audit governance a provider should build while detailed technical guidance is still being completed.
The segregation principle: separation in books, wallets and conduct
The first separation is accounting and identification: each client crypto assets must be recorded on a separate custody account, apart from the provider proprietary assets, so that at any moment the provider can prove total client assets match total client entitlements on the system. The second separation is technical at wallet level: private keys controlling client assets must sit in a dedicated custody wallet structure, sharing no wallet address with proprietary operations, so any movement between the two pools leaves a verifiable trail.
All three layers must appear in the client custody agreement through a clause affirming client ownership of custodied assets, an undertaking not to use assets without a valid client instruction, and a duty to return or transfer assets on instruction within a fixed period. The agreement should also govern assets accruing to custodied holdings, such as tokens arising from network events, to avoid disputes over entitlement between client and provider. A provider designing a yield-bearing deposit product must be especially careful: where yield is promised in exchange for the right to use assets, the legal relationship can slide from pure custody into an asset loan, and the entire insolvency protection analysis changes against the client.
When the custodian becomes insolvent: client assets stand outside the estate
The decisive question for the value of segregation appears only when the provider becomes insolvent: are client assets swept into the estate for distribution to the provider creditors or not. Under the principle of Recovery and Bankruptcy Law 142/2025/QH15, effective from 1 March 2026 and replacing Bankruptcy Law 51/2014, third-party assets that an insolvent enterprise merely holds in custody are not that enterprise property and do not enter the bankruptcy estate for distribution.
The protection conclusion holds only if segregation is real and provable: assets recorded on separate client accounts, in dedicated custody wallets and never deployed. If the provider has mixed or unlawfully used client assets to the point where each client share can no longer be identified, clients risk being pulled back into creditor status for the shortfall. This is why periodic reconciliation and the client right to receive custody balance confirmations carry real legal weight rather than being a mere lookup convenience.
Cold wallets, insurance and audit: governance duties while technical guidance is pending
The pilot framework sets the safe-custody principle, while the concrete cold-wallet ratio, insurance standards and detailed audit cycle belong to the group of matters awaiting regulator technical guidance at the writing date. In that interval the provider bears the duty to build its own governance standard proportionate to the risk: the bulk of custodied assets held in cold wallets away from the online environment, hot wallets capped at a daily servicing limit, and private keys managed under multi-signature with personal authorisation splits and a key-loss recovery procedure.
On insurance and audit, sound governance practice for crypto-asset custody includes insuring loss risk from technical attacks and internal fraud within market appetite, periodic independent audit of the existence and control of custodied assets, and a proof-of-reserves mechanism letting clients verify that total custodied assets are not below total client entitlements. Once official guidance is issued, these self-applied standards must be rechecked and raised to the statutory level if higher. A client choosing a custodian inside the pilot framework should request three documents: the asset segregation rules, the latest custody audit report and the in-force insurance certificate, instead of comparing custody fees alone between exchanges.
Frequently Asked Questions
How must a crypto-asset service provider custody and segregate client assets?
The provider must segregate at three layers: record each client assets on a separate custody account apart from proprietary assets, manage custody keys and wallet addresses separately from own-operation wallets, and never use client assets without a valid client instruction. Segregation must be written into the custody agreement with an affirmation of client ownership and a duty to return on instruction. Periodic reconciliation between total custodied assets and total client entitlements is the mechanism proving segregation is real, under the principle of Resolution 05/2025/NQ-CP.
May client assets be used for the service provider own activities?
No. The pilot framework bars the service provider from using client custodied assets for its own activities, including re-lending, pledging them for the provider own borrowing or placing them into yield programmes the client has not agreed separately in writing. If a client agrees to join a product that deploys assets for yield, the legal relationship is no longer pure custody and the client must be warned that insolvency protection will differ. Any asset-use agreement should therefore be a separate instrument, not buried in the general terms of the custody agreement.
If the custodian becomes insolvent, how are client crypto assets treated?
Under the principle of Recovery and Bankruptcy Law 142/2025/QH15, third-party assets an enterprise merely holds in custody do not belong to the bankruptcy estate, so a client purely custodied crypto assets stand outside the custodian estate and the client recovers its own assets instead of queuing as a creditor. The condition is segregation that is real and provable through account books and a dedicated wallet structure; assets mixed or unlawfully used beyond identification risk being treated as a debt claim. Vietnam has no crypto custodian insolvency case yet to test this procedure in practice.
What are the pilot framework requirements on cold wallets, insurance and custody audits?
At the writing date the pilot framework sets the safe-custody principle while the cold-wallet ratio, insurance standards and detailed audit cycle await technical guidance, so this article asserts no statutory figure. The governance a provider should self-build includes holding the bulk of assets in cold wallets, capping hot wallets by daily limit, multi-signature key management with split authorisation, insurance for technical and internal-fraud risk, independent audit of custodied asset existence and a proof-of-reserves mechanism for clients. Clients should ask to see the segregation rules, the latest audit report and the insurance certificate when choosing a custodian.
FLAT Law Firm vets custody terms before your enterprise deposits assets with any licensed exchange
The right to recover assets when an exchange fails is decided by the custody clauses signed on day one and the segregation evidence retained throughout, not by reassurance at the moment an incident occurs. FLAT Law Firm reviews the service provider custody agreement and asset-use terms, tests the segregation mechanism, the no-use clause and the return procedure, and sets out the reconciliation file the enterprise should retain to protect its legal position. Enterprises planning to hold crypto assets inside the pilot framework may send the exchange draft terms for vetting before transferring the first asset.
