Safeguarding bitcoin and keeping access reliable is one job.
Yield is a different job.
Below is a straightforward explanation of why we keep those categories separate, without moralizing, without sensational examples, and without assuming the reader wants a technical deep dive.
Start with a simple distinction: custody vs finance
In traditional wealth management, clients often use more than one type of service:
- Custody / safekeeping: hold assets securely and keep access reliable
- Investment / finance: seek return through managed exposure and risk-taking
Both can be legitimate. The difference is intent and risk.
Yield belongs to the second category. It is an investment activity, even when described as "passive" or "low risk."
Custody belongs to the first.
When a custodian offers yield on bitcoin, it blends these categories. The client may still choose it, but it should be understood as finance, not pure custody.
Where yield comes from (in plain language)
Yield does not appear by itself. It comes from someone, somewhere, taking the other side.
In practice, yield usually involves one or more of the following:
Lending to borrowers Bitcoin is lent out. The yield is the interest paid back, assuming borrowers perform.
Collateral and reuse Bitcoin is pledged or re-used in financing arrangements. Yield is earned by putting the asset into a chain of obligations.
Counterparty exposure Yield depends on another institution remaining solvent and operational.
Liquidity mismatch Clients want daily liquidity, while the underlying use of assets may be longer-dated or conditional. That mismatch is manageable until conditions tighten.
None of these are automatically "bad." They are simply risk-bearing activities.
The key point is: they are not custody.
Why yield changes the custody relationship
Even when executed responsibly, yield changes the nature of the promise a custodian is making.
1. Withdrawals stop being purely operational
In pure custody, withdrawal is an operational procedure: authenticate, approve, broadcast.
In a yield model, withdrawal becomes partly a liquidity decision:
- can positions be unwound?
- can collateral be released?
- do counterparties perform?
- is market liquidity available?
That introduces uncertainty precisely where a custody bank should be most reliable.
2. Incentives shift
In custody, the institution is rewarded for reliability over time.
In yield, the institution is rewarded for deployment and return.
Over time, that can change product decisions:
- pressure to keep assets "in the system"
- pressure to add features that increase retention
- more complexity to maintain returns across changing markets
This is not a character judgment. It is an incentives observation.
3. Complexity accumulates
Yield requires:
- counterparties
- legal agreements
- monitoring
- risk limits
- and operational processes that are more complex than holding assets
Complexity is not always wrong. But complexity increases the number of ways a system can fail.
A custody bank should be cautious about adding failure modes to a product whose core promise is continuity.
"But some clients want yield"
Many do. That preference is legitimate.
The question is not whether yield is desirable. The question is whether yield belongs inside the same institution that is tasked with conservative custody.
A custody-first institution can support clients who want yield in two ways:
- By keeping custody pure and letting clients deploy assets elsewhere if they choose, or
- By offering yield only as a clearly separate product with clearly separate terms and risk disclosures
What it should not do is blur the boundary so that a client believes they are in a custody product when they are actually in a finance product.
The custody standard: clarity over marketing
In traditional wealth management, credibility is built on clear categories:
- what is custody
- what is advisory
- what is discretionary risk
- what is illiquid
- what is liquid
Bitcoin deserves the same clarity.
If a product offers yield, it should be evaluated like an investment:
- Who are the counterparties?
- What are the terms?
- What are the failure modes?
- What happens under stress?
- What is the liquidity promise, and is it realistic?
If a product is custody, the questions should be simpler:
- Is it fully reserved?
- Is it segregated?
- Can I withdraw on-chain under clear policy?
Mixing these categories makes evaluation harder. That is rarely in the client's interest.
What we choose instead
We prefer a narrower mandate:
Custody is custody. Bitcoin held in custody is held for custody.
Pricing is transparent. Custody is paid for as custody, not subsidized by hidden deployment.
Buy/sell is optional. Execution exists as a service when clients choose to convert, without turning the relationship into a trading product.
Exit remains central. Withdrawals should stay operational, consistent, and governed by stable rules.
The point is clarity about categories.
A simple way to think about it
If you're holding bitcoin as long-term capital, you generally want two separate decisions:
- Where is it held? (custody decision)
- How is it used? (investment decision)
A custody bank is designed to make the first decision safe and durable.
Yield belongs to the second decision. It can be pursued intentionally, when the client wants it, understands it, and accepts the risks that come with it.
For a custody bank, the most conservative posture is to keep custody pure and keep client access reliable.
That is why we don't offer yield.
