Trading and wealth management platforms expanding into digital assets are catching up to competitors who are full steam ahead, and vying to hold on to client deposits. A recent survey found that nearly two thirds of younger investors have moved money out of their deposit accounts in the past year to fund investing elsewhere, and they’re leaving for the digital native platforms.

Many firms have moved past the question of when to bring the new asset class into the experience, and are now asking how. The decision is an operating-model choice. How much of the stack do you run yourself, and how much do you place with a partner?

There are three operating models for bringing crypto to your clients:

• Build in-house: You run every layer yourself, on your own licenses and compliance program. This offers maximum control, but is the longest time to market and biggest upfront investment.

• Stitch together vendors: Specialist providers hold some pieces while you coordinate across them. Faster than building in-house, but the seams are yours to hold.

• Run with one full-stack regulated partner: A single regulated counterparty provides custody, execution, settlement, and compliance behind your brand. Fastest to market, with one relationship to hold accountable.

Whichever model you choose, the same five operating layers exist: licensing, custody, execution, settlement, and compliance. The models differ in how many of those layers you run yourself and how quickly you can launch a product in-market.

Just because you launch with one model doesn’t mean you can’t pivot over time. For example, starting by running with one partner and eventually building in-house.

This post walks through each path so your teams can weigh them against the same criteria.

Path 1: Build it in-house

You run everything under your own licenses and compliance program and wire together all technology, from asset safekeeping to liquidity venues. That means no to minimal reliance on third-party vendors.

What you get is control. Every layer is yours to shape, and no partner's roadmap sets your pace.

This model requires a multi-year build and is heavy on engineering and investment. You also carry the downstream risk, everything from what settles to who you are facing to where the assets sit. The part teams underappreciate is the expertise it takes. You are standing up a specialized discipline in-house with a foreign vendor set and technology.

Building a digital asset offering in-house means that new chains, new assets, forks, and fresh attack vectors keep coming, and the platform needs steady investment just to keep up.

Build makes sense for the largest institutions, the ones with the talent and the capital to carry a permanent capability like this.

Path 2: Stitch together vendors

A hybrid model allows you to stitch various third-parties together, allowing you flexibility and choice in how each aspect of the offering functions.

You reach the market faster than you would by building, and you keep some say over who holds what.

Its real advantage is optionality. You reach the market faster than a build, you can choose a specialist for each layer, and spreading the work across vendors keeps you from concentrating everything in a single counterparty. For an institution with a capable operations and integration team, that flexibility is a worthwhile investment.

The tradeoff is that the pieces are yours to hold together. Each vendor needs its own diligence, the seams between them need monitoring, and a change at one can affect the others.

This model fits an institution that values vendor flexibility and has the operational depth to own the integration and coordinate the parts.

Path 3: Run with one full-stack regulated partner

One regulated counterparty operates custody, execution, settlement, and compliance as a single managed service behind your brand.

This is the quickest route to market, often months instead of years, and it leaves you with one partner to hold accountable. The end client stays yours and so does the brand. You still make the calls that matter.

The tradeoffs in this option stem from vendor concentration. If you partner with a single provider, you are betting on their capabilities and may not have optionality to configure all aspects of your stack exactly the way your team envisions. The feature set available for custody or execution are limited to that provider's roadmap. 

Depending on how you operate, you may still run parts of onboarding and oversight, and your regulator still holds you accountable for the program. A strong partner changes how much of that machinery you have to build and run yourself, but your brand and client base are relying on them. You need the utmost confidence in the vendor, including their regulatory posture and platform resiliency.  

Who do you call if it breaks?

The difference becomes concrete at 2am, when something has gone wrong.

If you built it, you own the fix end to end. In a hybrid model, the answer runs through a chain of vendors, and the first task is working out whose problem it is. With a full-stack partner, there is one accountable counterparty. 

How many parties sit between you and the fix is the question.

The real test is whether a partner meets your standard

Banks and fintechs launching digital asset solutions maybe comfortable owning the regulatory risk, and managing that is a core discipline. But what they need is a partner that operates at their own high standard.

When it comes to evaluating partners, look at the standards they use to run their platform and team, and whether those line up with your own expectations. Below are a few starting points.

Answering these questions stress-tests how the provider will hold up under scrutiny, whether from market conditions, scale, or regulator questions.

From there, your risk committee tests what the charter is meant to guarantee, from fiduciary custody and bankruptcy remoteness to segregation of client assets and a real operating history through full exam cycles and difficult markets. Who holds and operates the custody, where accountability sits, and how reliably the platform has run are the questions that decide safety and soundness. Doubt on any one of them can put you at jeopardy with your own regulators, so a partner worth choosing has strong answers to all of them.

Where Paxos fits

We run the full-stack model with Paxos Crypto Brokerage, and we operate it to the standard large financial institutions expect.

We’ve operated our brokerage and custody for digital assets under prudential supervision for 10+ years. Paxos Trust Company is a fiduciary custodian under a national trust charter from the OCC, with client assets held bankruptcy-remote, never rehypothecated, with dedicated wallets available. You choose how custody works: we can hold assets as fiduciary custodian, you can self-custody on our wallet infrastructure, or you can keep assets with a trusted third party. In every model, you set the policies, approvals, and thresholds.

On execution, we sit in the middle of every trade and absorb the counterparty and settlement risk, with smart order routing across a vetted liquidity network and best execution measured against an independent benchmark. 

We don’t run our own end user business, so we are a neutral partner that never competes for your clients. Paxos already powers regulated crypto for clients like Charles Schwab, Interactive Brokers, PayPal, and more, and we already issue regulated dollar stablecoins including PayPal USD (PYUSD), and Global Dollar (USDG).

If you are weighing how to bring digital assets to your clients, we can help. Contact us to learn more.