Crypto as a Service (CaaS) enables companies to offer digital asset services, such as trading, custody and crypto transfers, without having to develop all the necessary infrastructure themselves.
For these operations to be secure, efficient and compliant with regulations, three elements are essential: custody, liquidity and compliance. In this article, you will understand the role of each one and how they work together within a CaaS provider’s infrastructure.
Custody
Custody is responsible for storing and protecting the private keys that provide access to digital assets. Without a robust custody infrastructure, the entire operation is exposed to risks such as loss of access, asset theft and security breaches.
Hot and cold wallets
CaaS providers typically combine hot wallets, which are connected to the internet for day-to-day operations, with cold wallets, which are kept offline to store long-term reserves. This combination reduces exposure to attacks without compromising transaction speed.
Multi-Party Computation (MPC) technology
MPC technology distributes control of a private key among multiple parties, reducing dependence on a single point of failure. No individual party can authorize a transaction on its own, which strengthens operational security.
In addition to technological mechanisms, custody also involves regulatory requirements. According to BCB Resolution No. 520, companies authorized to act as virtual asset custodians in Brazil must follow rules requiring the segregation of proprietary assets from customer assets.
A mature custody infrastructure also provides environments with different levels of protection depending on the volume and purpose of the assets, as well as recovery mechanisms for incidents such as loss of access or technical failures.
Liquidity
Liquidity is the ability to buy, sell or transfer digital assets quickly without significantly affecting their price. For companies that rely on CaaS, this means executing orders quickly and with limited price impact, even for larger transactions.
To achieve this, CaaS providers typically aggregate liquidity from multiple exchanges and market makers within a single infrastructure. This approach reduces dependence on a single counterparty and expands execution options.
Smart order routing
Smart order routing directs each transaction to the most advantageous source of liquidity at the time of execution. This mechanism helps reduce slippage and improves the efficiency of trades carried out on behalf of the end customer.
Stablecoins as a settlement layer
Fiat-pegged stablecoins such as USDT, USDC, EURC and BRZ are often part of this infrastructure. They facilitate transaction settlement and the movement of funds between different markets, reducing exposure to the volatility of other digital assets.
Compliance
Compliance brings together processes and controls designed to ensure that operations comply with applicable regulations, including measures to prevent money laundering and terrorist financing.
In Brazil, the regulatory framework for virtual asset service providers now requires prior authorization for certain activities and establishes specific responsibilities for companies involved in intermediation and custody. By working with a CaaS provider that already complies with these requirements, companies can reduce some of the regulatory complexity involved in operating with digital assets.
KYC and AML processes
KYC (Know Your Customer) and AML (Anti-Money Laundering) processes verify users’ identities and monitor transactions for suspicious patterns. These procedures run continuously, not only when an account is created.
In addition to user identification, this structure includes ongoing risk monitoring, transaction records and traceability, making audits and compliance with regulatory requirements easier.
How these layers work together
Custody, liquidity and compliance operate as an integrated system. Executing a transaction depends on available liquidity, goes through regulatory checks and ends with the secure movement of assets under custody.
Companies that attempt to build these three layers internally face high technology, security and regulatory compliance costs. A CaaS provider delivers this infrastructure ready to use, allowing the client to focus on its own product.
Who benefits from this infrastructure?
Exchanges, fintechs, digital wallets, payment platforms and financial institutions use this model to launch or expand digital asset services without having to develop their entire custody, liquidity and compliance infrastructure internally. This allows them to reduce implementation time, simplify operations and focus their efforts on developing their own products.
CaaS as a foundation for scaling digital asset operations
Custody, liquidity and compliance are the pillars that support any digital asset operation at scale. When these capabilities are already part of a CaaS provider’s infrastructure, companies can accelerate the launch of new products, reduce operational complexity and meet regulatory requirements more efficiently.
If you want to incorporate digital asset services into your business, learn how Transfero’s Crypto as a Service solution brings these three capabilities together in a single infrastructure. Talk to our sales team.
