Custody, Safeguarding and Record‑Keeping for Tokenised Property Shares

Under existing UK regulatory principles, firms that hold or arrange the holding of client assets must put in place robust safeguarding arrangements. The Financial Conduct Authority’s client asset rules (CASS) and broader principles on systems and controls emphasise clear legal ownership, segregation, reconciliation and operational resilience. Tokenised securities do not remove these fundamentals: a digital register replaces some paper processes, but legal clarity on who holds beneficial title, how assets are segregated and how records are reconciled remains central.

Practically, platforms and custodians should demonstrate a legal chain from the underlying property or SPV interest to the digital token, and produce regular reconciliations between on‑chain ledgers (or internal registers) and off‑chain legal records (land registry entries, company share registers, trust deeds). Firms must also address operational risks unique to digital custody such as key management, multisig arrangements, privileged access controls and secure backup of records. Where firms hold client money alongside tokenised assets, separate client money rules and segregation requirements apply.

From an investor perspective the key protections to look for are: independent audit or proof of reserves for the register, clearly documented legal architecture for beneficial ownership, regulated custody or trustee arrangements, and transparent reconciliation and reporting cadence. These protections translate to clearer legal claims and lower operational counterparty risk when fractional property interests are offered to everyday savers.