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Financial Institutions

Institutional-Grade Virtual Asset Custody

The Class R Virtual Asset Custodian licence authorises the provision of professional custodian services for virtual assets, the institutional standard for digital asset safekeeping sought by funds, family offices, and high-net-worth investors.

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Overview

What is a Class R Virtual Asset Custodian?

While the Class O covers retail-focused wallet services, the Class R licence is designed for institutional-grade custodians providing secure, professional safekeeping of virtual assets for funds, financial institutions, and sophisticated investors. Class R licensees are expected to implement the highest standards of physical and cybersecurity, multi-signature key management, insurance against loss, and comprehensive operational governance.

As digital assets flow into institutional portfolios, the demand for FSC-regulated custodians has grown significantly. The Class R provides the regulated infrastructure that institutional investors require, a credible, independently governed custody structure that satisfies the due diligence expectations of fund managers, institutional allocators, and family office investment committees.

Aurevya advises Class R applicants on the design of institutional-grade custody operations, from security architecture and operational procedures through to FSC application, insurance arrangement, and ongoing governance.

VAITO Act
2021, FSC Licensed
Regulated under Mauritius's purpose-built virtual asset legislation, providing internationally recognised regulatory standing for institutional virtual asset custodians.
Institutional
Grade Standards
The highest operational, security, and governance standards among the VAITO Act custody licences, reflecting the institutional mandates of the Class R's client base.
Fund-Ready
Custody Structure
Designed to satisfy the custodian appointment requirements of FSC-regulated funds and the due diligence expectations of institutional investors allocating to digital asset strategies.

Scope of Authority

Key Features

Institutional Custody
Authorised to provide professional safekeeping services for virtual assets on behalf of institutional clients, funds, family offices, investment managers, and sophisticated investors, under the full regulatory standing of the VAITO Act Class R licence.
Multi-Signature Security
The Class R requires multi-signature key management, ensuring that no single person or system can unilaterally access client virtual assets. This distributed security model is the institutional standard for professional virtual asset custody operations.
Cold Storage Infrastructure
Institutional custodians are expected to maintain cold storage capability, holding the majority of client virtual assets in offline, air-gapped storage to protect against cybersecurity threats, combined with controlled warm and hot wallet facilities for operational requirements.
Fund-Ready Compliance
The Class R custody structure is designed to satisfy the custodian appointment requirements of FSC-regulated CIS, closed-end funds, and VCCs, providing fund managers with an FSC-regulated, Mauritius-domiciled custodian for their digital asset allocations.
Insurance Coverage
Class R custodians are required to maintain insurance against loss or theft of client virtual assets, a critical requirement for institutional clients whose investment mandates require evidence of comprehensive risk coverage for custodied assets.
FSC Oversight
Full VAITO Act regulatory oversight, including technology platform review, AML/CFT supervision, regular security audits, and ongoing FSC reporting, providing institutional clients with the independent regulatory assurance they require for digital asset custody mandates.

Process

How It Works

01
Custody Model Design
We work with the applicant to design the custody model, client segments, virtual asset categories to be custodied, key management architecture, segregation approach, and governance structure, ensuring the design meets both FSC requirements and institutional client expectations.
02
Security Architecture Review
The FSC scrutinises the security architecture of Class R applicants in depth, multi-signature key management, cold storage infrastructure, access authorisation procedures, cybersecurity controls, and incident response. We prepare the security documentation and identify any required enhancements before submission.
03
FSC Application
Preparation and submission of the complete VAITO Act Class R application, business plan, security architecture documentation, operational procedures, AML/CFT programme, key personnel fit-and-proper submissions, and financial projections, presented to the highest standard for institutional regulatory review.
04
Operational Procedures
Development of the comprehensive operational procedures required for institutional custody, client onboarding and segregation procedures, key management protocols, client reporting frameworks, and compliance monitoring, ensuring operational readiness alongside the regulatory application.
05
Insurance Arrangement
We advise on the structure and procurement of the insurance coverage required for Class R licensees, including crime and cyber insurance policies appropriate for institutional virtual asset custody, coordinating with specialist insurers active in the digital asset space.
06
Licence Grant
Active management of the FSC review, including responses to technology and security assessment queries, through to licence grant. We coordinate final operational readiness to ensure the Class R custodian is fully prepared to begin institutional client onboarding from day one.

Practical Considerations

Requirements & Timeline

Regulatory Requirements

  • Higher minimum capital than Class O, reflecting institutional custody risk profile
  • Multi-signature key management for all client virtual asset holdings
  • Cold storage capability for the majority of custodied assets
  • Insurance against loss or theft of client virtual assets
  • Qualified Custody Officer approved by the FSC
  • Regular independent security audits of the custody infrastructure
  • Client asset segregation and comprehensive custody reporting
  • AML/CFT programme aligned with FATF virtual asset guidance

Indicative Timeline

  • Corporate Setup: 2–3 weeks from completion of KYC and structure documentation
  • Application Preparation: 6–10 weeks, security architecture documentation, insurance arrangement, and operational procedures are typically the most time-intensive elements
  • FSC Review: 14–20 weeks from submission, the depth of security and operational review reflects the institutional standards applied to Class R applicants
  • Operational Launch: 4–6 weeks post-licence grant for final infrastructure configuration and client onboarding procedures

Common Questions

Frequently Asked Questions

The Class R custodian serves institutional clients who require professional, regulated safekeeping for their virtual asset holdings. Primary users include FSC-regulated funds (CIS, closed-end funds, VCCs) allocating to digital assets who require an appointed custodian; family offices managing digital asset allocations on behalf of principals; investment managers seeking segregated custody for client digital asset portfolios; and sophisticated investors who require institutional-grade governance for significant virtual asset holdings. The Class R is not aimed at retail users, it is the institutional custody standard for professional digital asset capital.
Both licences cover the safekeeping of virtual assets, but they operate at different levels of the market. The Class O is designed for retail-facing wallet service providers, digital banks, payment platforms, and fintech apps, with proportionate regulatory requirements calibrated to retail custody risks. The Class R is the institutional standard, carrying higher capital requirements, mandatory multi-signature key management, cold storage infrastructure, insurance coverage, and regular independent security audits. The Class R is designed to satisfy the due diligence requirements of institutional investors and fund managers, which go beyond what the Class O framework requires.
Class R custodians are subject to the most demanding security requirements under the VAITO Act framework. Key requirements include multi-signature key management (preventing unilateral access to client assets), cold storage for the majority of custodied assets (protecting against online attack), physical security for hardware security modules and cold storage devices, access authorisation procedures for any key usage, cybersecurity controls against external and internal threats, and incident response and key recovery procedures tested regularly. The FSC reviews the security architecture as a core element of the application and may require enhancements or third-party security assessments before granting the licence.
Yes. Class R custodians are required to maintain insurance against loss or theft of client virtual assets, recognising that no security system is infallible and that institutional clients require the backstop of insurance coverage for their digital asset holdings. The insurance must be appropriate for the scope of custody operations and the value of assets under custody. Aurevya advises on the insurance structures available in the digital asset space, including crime policies, cyber insurance, and specialist virtual asset custody insurance products from underwriters active in this market.
Yes, subject to the description of virtual assets included in the business plan submitted to the FSC. The Class R licence does not restrict custody to a single virtual asset, the custodian may hold multiple categories of virtual assets as described in its application and approved by the FSC. Different virtual assets may require different technical infrastructure (different blockchain protocols, hardware wallet support), and the FSC will assess the custodian's technical capability for each category of virtual asset it proposes to hold. Aurevya advises on how to scope and present the virtual asset universe in a manner that is both commercially comprehensive and technically credible to the FSC.

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