Client Asset Segregation

Client asset segregation is the requirement that a custodian or exchange keep customer crypto and cash separate from its own corporate funds, in distinct accounts or wallets and in its books and records. The purpose is to make ownership clear if the firm fails: segregated assets are more likely to be identified as belonging to clients rather than swept into the general estate for creditors. Segregation is usually paired with rules against using client assets for the firm's own trading, lending or collateral without explicit consent, plus regular reconciliation between recorded balances and on-chain holdings. Even with segregation, recovery in an insolvency can be slow and incomplete, and protections differ substantially between jurisdictions and platform types.