If you’re an institution in the digital asset space using self custody wallets, the shift away from SaaS-based solutions is no longer a question of if—it’s when.
Traditional financial institutions, alongside asset managers, and crypto-native firms, are re-evaluating their reliance on third-party self-custody providers as they recognize the risks of vendor lock-in, security black boxes, and regulatory pressure to improve their operational resilience.
The rise of self custody wallet solutions after the FTX collapse was driven by the urgent need to mitigate counterparty risk. For many, a SaaS hosted MPC wallet seemed like the simplest way to address these concerns. But as traditional players enter the space, they are raising the bar—demanding more transparency, better operational resilience, and full control over any custody technology they use directly or indirectly.
This article explores why SaaS wallets are no longer sufficient for institutions, the advantages of self-hosted custody, and how Cordial Treasury eliminates the challenges of making the switch.
Institutional Standards Are Raising the Bar for Custody
The entry of traditional financial institutions into the digital asset space has reshaped industry expectations. Whether launching their own products or acting as limited partners (LPs) in funds. Traditional financial services providers have a non-negotiable requirement to control their critical IT for reasons of operational resilience, security, and compliance. Likewise, large capital allocators expect an operational maturity and control framework that is quite frankly absent in most of today’s crypto hedge funds.
For regulated institutions, the deceptively named “self custody” wallets which are SaaS hosted present several red flags:
- Data privacy risks – Institutions cannot share sensitive transaction data with a third party that has no right to know about it.
- Vendor dependency concerns – Relying on a single provider for mission-critical IT creates operational risks.
- Regulatory mandates – Compliance obligations like MiCA, DORA, and UK Operational Resiliency Rules require institutions to rethink IT outsourcing risks and demonstrate operational resilience.
As traditional finance and digital assets converge and further intertwine, crypto native institutions that once defaulted to SaaS wallets are also now asking:
👉 What happens when mission-critical software fails?
👉 What if the custody provider gets acquired or is unavailable for several hours?
👉 Do we have real control over our security, or are we trusting a black-box vendor?
With institutional capital at stake, if you’re performing simple paper based due diligence questionnaires and your ongoing vendor monitoring resembles a passive “just trust the vendor, they’re security experts” - this is no longer acceptable. When things do go wrong (and they will) the support tickets mount up, service level agreements (SLAs) turn out to be meaningless, and your priority is not their concern.
Self-Hosted Custody: A Requirement, Not a Luxury
Self-hosted custody solutions ensure that institutions retain full control over their digital asset wallet infrastructure—eliminating vendor dependencies and aligning with established security and compliance frameworks.
With a self-hosted digital asset custody model, institutions can:
✅ Own their cryptographic key management—Obey the "same actor" principle by generating and managing key material internally. If you have verified the cryptography the software uses, you should also be the one creating and controlling your private keys—not the vendor. No more trusting a third party to generate a key, send it to you, and hope they haven't retained a copy.
✅ Host their own policy engine—Run the policy logic entirely within your infrastructure. Unlike a lot of MPC SaaS vendors that store customer policies in a SQL database—which can be tampered with by a single bad actor. Or, the vendor could even simply fail to provide reasonable assurances that the policy applied is in fact the one that you intended. Cordial Treasury ensures policies are independently applied across participants in a fault-tolerant, consensus-driven way and are determined by your internally designated policy administrator.
✅Enforce custom transaction approval workflows – Define and apply transaction rules, security parameters, and access permissions that align with your internal governance standards— don’t just put up with coarse user permission templates and basic transfer policies.
✅ Maintain full data sovereignty— Ensuring sensitive transaction data is stored only within their internal infrastructure and not exposed to external parties. You can also deploy the wallet infrastructure in specific jurisdictions to comply with regional regulatory or data localization requirements.
✅ Integrate with existing systems – Seamlessly connect Cordial Treasury with your identity providers, middle-office systems, and external applications to maintain operational efficiency with your preferred and vetted service providers.
✅ Apply your own security control framework – Impose your internal security standards and protocols on the custody environment, rather than inheriting a vendor-defined framework with unknown security assumptions.
✅ Add new blockchains without waiting on vendor timelines—supporting institutional growth, market expansion, and increased asset coverage —without third-party bottlenecks.
By contrast, SaaS custody providers operate in a vendor side hosted multi-tenant environment, meaning:
❌ You inherit the vendor’s deployment model, even if it doesn’t align with your views on an enterprise approach to ensuring service availability and security.
❌ Your cryptographic keys are generated and stored within vendor-controlled infrastructure, leaving you dependent on their security and trust them to be online for signing.
❌ Your policy and transaction approval logic are enforced externally, rather than within your IT environment, meaning the vendor is de facto your policy administrator.
❌ Your ability to meet compliance requirements (e.g., MiCA, DORA) depends on the vendor’s adherence to evolving regulatory frameworks. Yet you remain on the hook, you can not delegate or outsource your compliance obligations.
❌ Your transaction history, metadata, and system logs are retained on the vendor’s servers. Creating regulatory and privacy concerns, you also may not be able to port this data when you want to offboard - leaving your record keeping obligations at risk.
❌ Your ability to add new blockchains or assets is dictated by the vendor’s roadmap, slowing down your business functions and their ability to pursue revenue opportunities.
For some smaller firms or early-stage startups, a SaaS wallet model may offer a faster path to market, reducing operational overhead by offloading key management and infrastructure concerns to a third party environment.
However, for established financial institutions and mature Virtual Asset Service Providers (VASPs), these trade-offs become unacceptable. Relying on a vendor’s infrastructure, security model, and governance policies introduces compliance blind spots, operational bottlenecks, and external risks that are entirely out of the institution’s control.
A regulated bank, asset manager, or exchange cannot afford to inherit the security posture of a third-party provider, nor can it rely on external vendors to dictate how assets are secured, how policies are enforced, or when new blockchains are supported.
For institutions managing regulated digital assets, retaining full control over cryptographic key generation, security policies, and data residency isn’t just a preference—it’s a requirement.
Why Most Self-Hosted Wallets Fail
The shift toward self-hosted digital asset custody has put SaaS wallet vendors in a tough spot. Many initially launched as cloud-first products but later faced pressure to provide a self-hosted version for enterprise clients.
However, rearchitecting a SaaS wallet for self-hosted deployment is an extremely difficult process. Simply taking a cloud-native product and forcing it into an enterprise environment creates significant technical and operational hurdles:
🔹 Application containerization – SaaS vendors need to make their product portable and self-contained.
🔹 Replacing cloud-managed dependencies – Authentication, analytics, storage, and networking must be rebuilt for an enterprise environment.
🔹 Configuring security and access controls – Institutions require secure networking (VPNs, ingress/egress policies) to align with their existing IT stack.
The result? Many institutions attempting to self-host SaaS wallets end up with an expensive, complex “Frankenstein’s wallet” that still doesn’t fully meet risk committee requirements.
Self-hosted wallets need to be designed from the ground up—not as an afterthought, or as a response to the vendor’s sales team telling a large prospect: “it can be done”.
How Cordial Treasury Makes Self-Hosting Simple
Unlike vendors trying to force a SaaS product into a self-hosted model, Cordial Treasury was built from the beginning as an enterprise-grade, self-hosted solution.
With Cordial Treasury, institutions don’t need to navigate long, complex deployment cycles or rely on vendor-led professional services to get started.
Deployment with Cordial Treasury is simple. Requirements:
- Install Docker
- Configure a secure flat network, could use Wireguard
- Run the setup ceremony to initialize nodes
A Treasury instance is a defined set of independent nodes, each running on a dedicated server. Usually the set consists of two or four nodes. Each node will be a single Docker container running various Cordial Treasury processes. To get started you can simply run the command through the command line tool. This pulls the latest release and creates a unique Treasury ID associated with your deployment, then starts all of the processes (policy engine, signing capabilities, connectors talking with the various public blockchains etc). Follow along with our Quick Start Guide to efficiently create a basic setup on testnets. There are further exercises to improve on this such as: setup your identity provider, integrate any other upstream or downstream systems, and various options of security hardening.
Security and operational resilience are built in:
- Consensus-based upgrades – No single admin can unilaterally push changes, ensuring transaction integrity through multi-party verification.
- Pre-upgrade validation checks – Ensure security policies remain intact by running automated checks before any system update.
- Automated backups and rollback mechanisms – Minimize downtime risks with encrypted, routine backups and seamless rollback capabilities.
- Multi-node hosting – Institutions can distribute Cordial nodes across multiple teams or geographic regions to improve fault tolerance and resilience.
- Staging and production environment support – Run both a staging and production environment to test updates, configurations, and new integrations before going live—mitigating potential errors in the process.
- Flexible infrastructure options – While this setup is straightforward for most technical teams, institutions that prefer not to manage multiple servers can opt for a co-hosting partner to share some of the infrastructure load. The trade-off in diversifying the environment this way is that the hosting partner becomes an availability risk, but never a security risk.
With Cordial Treasury, institutions maintain complete control over their digital asset custody infrastructure—enabling secure, reliable, and compliant operations while leveraging flexible, self-hosted MPC wallet technology to support their evolving business needs.
Self-Hosting Is No Longer an Obstacle—It’s the Only Way Forward
For years, institutions hesitated to self-host their digital asset wallet infrastructure due to complexity and operational challenges. Typically this involved long project lead times, contracting with multiple hardware vendors, and a significant cost.
That’s no longer the case.
With Cordial Treasury, institutions can deploy a secure, compliant, and institutionally fit custody solution without friction. SaaS-based wallets once dominated the market, but as institutional capital flows into digital assets, the industry is maturing—and so are its custody requirements.
The future of enterprise digital asset custody is self-hosted.
📩 Contact us today for a demo and take back control of your digital asset infrastructure. Or get hands on with a risk-free and no commercial commitment testnet version by completing the request form here.
