Custodial vs Non-Custodial

Model Definitions

Where funds reside: In the business’s Account Wallet.
User representation: End-user balances are tracked on your internal ledger (off-chain).
Deposit behavior: Users may fund via a stable deposit address; funds credit your Account Wallet.
Operational profile: Simpler treasury management, higher custody obligations.

Where funds reside: In User Wallets provisioned per end user.
User representation: On-chain ownership with a persistent deposit address per wallet.
Deposit behavior: Users always deposit to their own address; no commingling by default.
Operational profile: Strong segregation and transparency; governance required for outbound actions.

3PAY is a technology company. We provide non-custodial infrastructure, policy controls, and on-chain transparency.
Onboarding: If your use case aligns with our compliance measures (sanctions/AML screening, restricted-country policy, refunds-to-origin, governance controls), we onboard you to the platform.
Your obligations: You are responsible for your KYC/KYB, ongoing monitoring, licensing where applicable, and decision-making related to client funds and flows. Choices you make about custody, settlement, payouts, and user eligibility are your decisions and your responsibility, not 3PAY’s.

Sanctions & AML screening: Apply screening to inbound/outbound movements; retain evidence.
Restricted jurisdictions: Enforce country restrictions at onboarding and transaction time.
Recordkeeping: Maintain linkage between walletId, address, user/account identifiers, and transaction metadata.
Disclosures: Clearly communicate to users whether funds are held on-chain (non-custodial) or on your ledger (custodial).

Aspect	Custodial	Non-Custodial
Fund location	Account Wallet (pooled)	Per-user User Wallets (segregated)
Ownership signal	Off-chain (your ledger)	On-chain (verifiable)
Counterparty risk	Higher (you hold funds)	Lower (user holds funds)
Treasury ops	Centralized, simpler	Decentralized, policy-driven
User deposit address	Stable address credits Account Wallet	Stable address per user wallet
Compliance surface	Heavier custody obligations	Heavier governance orchestration
User trust/auditability	Indirect (via your reports)	Direct (blockchain verification)

Choose Custodial if:

You operate a model where the business holds client balances and runs an internal ledger.
You require centralized treasury and uniform settlement behavior.
Your licensing/compliance framework permits custody of client funds.

Choose Non-Custodial if:

Policies: Define approval thresholds, roles (Ops/Finance/Compliance), and velocity limits for outbound transfers.
Approvals: Require multi-party approval for high-value or external payouts.
Monitoring: Alert on unusual balance movements or policy exceptions.
Segregation guardrails (non-custodial): Prevent sweeping from User Wallets to Account Wallet unless explicitly authorized.

Both models can coexist. Many programs run non-custodial for user funds while keeping an Account Wallet for fees, treasury, or liquidity.
You can migrate gradually: start custodial for operational simplicity, introduce User Wallets as compliance or market requirements evolve—no architectural rewrite.

3PAY provides infrastructure and controls but does not make custody or compliance decisions on your behalf.
Your selection of model, corridors, payout partners, and end-user eligibility must comply with applicable laws and your licensing.
3PAY may refuse or suspend access if your use does not align with our compliance measures.