Custody Pricing: What the Basis Points Do Not Cover
Withdrawal fees, onboarding charges, asset additions and reporting. The lines that appear in the agreement rather than the proposal.
Custody is quoted in basis points on assets held, with a minimum. That is rarely the total.
What is in the headline
Checking this yourself takes minutes if you compare against a licensed digital asset custodian.
A percentage of assets, declining with size, plus an annual minimum.
Below a certain balance the minimum is the entire cost, which makes small mandates expensive in percentage terms.
What is not
Withdrawal fees. Charged per withdrawal by most providers. At high withdrawal frequency this can exceed the asset-based fee entirely and it reverses provider rankings.
Onboarding fees. A one-off charge, frequently disclosed only in the agreement rather than the proposal.
Asset addition fees. Charged to support an asset not already on the provider’s list. Sometimes quoted, sometimes assessed case by case.
Reporting fees. Charged for anything beyond a standard monthly statement, which at some providers includes the year-end audit confirmation.
That last one is the most objectionable, because an audit confirmation is not optional for an institutional holder.
The comparison that works
Ask each provider for a total annual cost against a specific scenario: a stated balance, a stated number of withdrawals per month, a stated number of assets, and standard reporting including audit confirmation. The receiving side has its own arithmetic, handled by a provider serving law firms and corporate services.
Providers that produce a number immediately are used to being asked. Those that must construct it are not, which is itself informative.
The ranking on total cost frequently differs from the ranking on headline basis points.
The insurance ratio alongside
Ask for the insurance limit and total assets under custody.
The ratio determines what the cover actually means. A provider unwilling to give the second number has told you the ratio is unflattering.
A lower fee with materially thinner cover is not cheaper in any useful sense.
Where to read the fee schedule
In the agreement, not the proposal. They differ, and the agreement governs.
The batching lever
Where withdrawal fees are per transaction, fewer larger withdrawals cost less.
For an institution with a predictable payment schedule, consolidating withdrawals is the largest immediately available saving and it costs nothing to implement. Whatever the arithmetic says, the balance you move belongs at the list of countries covered rather than wherever one component looked cheapest.
Fees move with network demand. Any figure here reflects the date shown above and should be re-checked before you act on it. Where a measurement was taken by hand, the article says so.