Frequently Asked Questions​

How does custody work?

Custody Arrangements

In accordance with regulation 16C of the Payment Services Regulations made by the Monetary Authority of Singapore, Paxos Global is required to safeguard assets (including digital payment tokens) belonging to each customer by depositing such assets in a custody account and holding such assets on trust for the benefit of the customer.

All crypto and other assets that are received from or on account of customers will be treated as belonging to the customer and will be deposited in an omnibus custody account maintained with Paxos Global, and held on trust by Paxos Global for the benefit of customers. Customers’ crypto and other assets will not be commingled with Paxos’ own assets, but will be commingled with the crypto and other assets of other customers. Where a customer’s crypto and other assets are commingled with those of other customers in an omnibus custody account, each customer’s crypto and other assets may not be separately identifiable and each customer would be entitled to only a share of the commingled pool of crypto and other assets.. There may be losses to the crypto and other assets in the omnibus custody account in certain circumstances (e.g. crypto assets may be lost as a result of security breaches, or electronic, technological or systems failures (including recordkeeping errors)). In the event of a shortfall of assets in the omnibus custody account, a customer may have to share in the losses. It is also possible, depending on the circumstances, that customers may not share equally in the losses, or a customer could suffer losses in a greater proportion compared to other customers.  

In the event of an insolvency of Paxos Global, customers’ crypto and other assets that are held on trust for the benefit of customers should ordinarily not be available to pay the debts or liabilities of Paxos Global or for distribution to Paxos Global’s general creditors. However, there may be exceptional circumstances where a customer is not able to fully recover his/her crypto or other assets.

For customers of Paxos Global, please refer to the Paxos Global Addendum to the General Terms and Conditions (accessible at: which set out the terms and conditions that apply to the custody arrangement described above.

Risk Management Controls

Storage Arrangements

Paxos utilizes a combination of hot wallets (i.e. storage media that are connected to the Internet) and cold wallets (i.e. storage media that are not connected to the Internet) to manage the storage of customer crypto assets. A small proportion (10% or less) of assets are held in hot wallets to (i) help minimize delays by providing immediate liquidity for customer withdrawals and (ii) meet day-to-day operational flows. Our hot wallets utilize an in-house policy engine to manage risk, and employ certified physical security measures and industry standard software cryptographic primitives. The bulk (90% or more) of our assets are held in cold wallets, which provide a greater degree of security – any transfers out of Paxos cold wallets can only be conducted in our physically secure global offline environments. 

To mitigate the risk of loss, Paxos has a stringent key management process adhering to wallet management policy. We have multiple controls, policies and procedures governing the key management process. Paxos also maintains backup copies of private keys to ensure recoverability of assets.

(i) All wallets requires an M of N threshold of signers and no one person has the ability to move funds on his or her own; 

(ii) Cold Wallet Private keys and hardware devices are never connected to the internet and are never assembled on a single machine; 

(iii) Enhanced physical security protocols around key storage and signing process; and 

(iv) Scheduled audits of all private keys (primary and backup), hardware and wallet inventory.

Digital assets may be moved between our hot and cold wallets based on internal operational considerations. These may include (but are not limited to) the sweeping of assets into a centralized omnibus wallet and the shifting of assets into cold storage.


As an additional layer of customer protection, Paxos also has competitive digital asset custody insurance policies in place on all its assets, underwritten by industry leading insurance carriers. Paxos’ cold wallets are covered by Specie insurance, covering physical damages or destruction of keys, and hot wallets are covered by Commercial Crime insurance which covers theft of assets (i) via employee collusion, (ii) via a third party breach or (iii) on premises or in transit. To the extent that customers have suffered losses in crypto and other assets and such losses are covered by insurance payouts, Paxos may, in its discretion and as appropriate, compensate the affected customers using the insurance payouts.

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DFS Complaints: You may direct a complaint to the attention of the New York State Department of Financial Services at One State Street New York, NY 10004-1511 or 1-800-342-3736. Please visit for information.