Governing Digital Asset Partnerships in Banking

Digital asset partnerships can expand banks’ capabilities, and strong governance helps keep accountability clear as complexity grows. 

Banks exploring digital asset offerings rarely do so alone. A digital asset offering can involve fintech platforms, custody providers, blockchain analytics companies, and technology vendors. It also might include other financial services organizations supporting activities such as token exchange, minting and burning, customer interfaces, and transaction monitoring. Partnering with others gives banks access to specialized capabilities and helps them bring new products to market without building every component internally.

However, this approach can create complex governance challenges. Operational responsibilities can be distributed among several organizations, but banks are accountable to their customers, board, auditors, and regulators. As digital asset partnerships grow more sophisticated, banks need governance practices that keep pace with new operating models.

Understand how digital asset partnerships raise the governance stakes

Third-party relationships are familiar territory for banks, and many organizations have strengthened their third-party risk management programs in recent years. However, digital asset partnerships introduce dependencies that conventional vendor oversight was not designed to address. Some examples include:

• On-chain logic can be immutable. Some digital asset partnerships rely on smart contracts. Unlike a vendor agreement that can be amended, smart contract terms might be difficult to change after deployment. Banks need governance that includes code audit requirements, clarity on upgrade mechanisms, and explicit accountability for on-chain decisions.
• Key management is a unique control failure point. Questions, such as who holds private keys and under what custodial controls and what happens in the event of a security incident or provider failure, have no clean analog in traditional vendor management. Governance should define custody arrangements, access controls, and incident response procedures specific to private key infrastructure and not simply map them onto existing IT security frameworks.
• The vendor ecosystem is concentrated. The infrastructure market supporting digital asset activity, custody, blockchain analytics, and node operations is served by a relatively small number of providers. Banks could unknowingly share dependencies with competitors and create systemic exposure. Governance should surface those concentrations and evaluate the implications of a single provider’s failure.
• Regulatory requirements are fragmented and still evolving. Digital asset rules vary across state jurisdictions and financial regulators such as the Office of the Comptroller of the Currency (OCC), the U.S. Commodity Futures Trading Commission (CFTC), the U.S. Securities and Exchange Commission (SEC), and others. Governance needs to treat regulatory monitoring as an ongoing function, not a point-in-time compliance review.

A single product might combine multiple technology providers, on-chain and off-chain activity, a customer-facing fintech platform, new transaction or asset types, and compliance obligations that remain under the bank’s control. A problem at one provider can ripple through the broader ecosystem, potentially affecting customer access, transaction monitoring, financial reporting, cybersecurity, or regulatory compliance.

Understanding those interdependencies is essential. Banks need to know what each partner does and how the parties work together, where handoffs occur, and who is responsible when something goes wrong. Identifying these factors requires governance to develop alongside the operating model rather than follow it.

Bring governance into the conversation early

Effective governance begins during strategy and product design, before contracts are executed and responsibilities become difficult to change, so involving the functions that will operate or oversee the relationship is critical. Depending on the offering, stakeholders could include legal, compliance and risk, finance and accounting, operations, internal audit, cybersecurity, fraud, third-party risk, and vendor management. Executive ownership also should be established along with appropriate board visibility into how the partnership supports the bank’s strategy and aligns with their risk appetite.

Early collaboration helps banks answer practical questions before launch, such as:

• Who performs customer onboarding and wallet due diligence?
• Who has authority to approve token life cycle decisions such as minting, burning, or pausing, and what approval process governs those actions?
• Who monitors transactions and sanctions risk?
• Who approves exceptions?
• Who manages complaints?
• How will incidents be escalated?
• Who is accountable for resolving them?

These decisions should be explicit. Banks can establish who performs, approves, monitors, and reports each critical activity and then incorporate those responsibilities into the operating model and governance structure. Clear accountability becomes especially important when several partners contribute to a single customer experience.

The following governance matrix can help organizations identify where responsibilities, decisions, and digital asset risks need to be made explicit across the bank and its partners.