Regulatory Alignment

Regulators keep reaching the same conclusion: pooled customer funds create custody, and custody creates obligations. Blend was built with compliance in mind. Every user gets their own Safe, and Blend cannot move it outside the mandate. The past few years showed what happens when platforms co-mingle customer funds. FTX pooled user assets with its trading arm, resulting in a $12.7 billion CFTC judgment. Celsius co-mingled deposits, and a court ruled those assets belonged to the company’s estate. Users became unsecured creditors. Blend’s architecture avoids both failure modes by design. Every user gets their own isolated Safe. Funds are never pooled, never co-mingled, and never held by Blend.

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Non-custodial by design

The regulatory test is the same everywhere: can the protocol move user assets without the user’s approval? If not, there is no custody relationship. Be precise about what the user approves. The mandate is granted up front: this account, this venue whitelist. Within the mandate, Blend routes capital without per-transaction signatures. That is the product. Outside the mandate, nothing moves. Blend cannot act outside the pre-approved, whitelisted set. There is no admin key. There is no override. This is not a policy choice. It is a structural property of the protocol. Blend does not custody user funds because it cannot custody user funds.

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United States

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Stablecoin legislation

Two bills are shaping the US stablecoin landscape: Both bills target stablecoin issuers (Circle, Tether), not platforms or protocols. They require 1:1 reserve backing and fund segregation. Neither bill directly regulates non-custodial infrastructure like Blend. Both signal a clear preference for per-user fund segregation over omnibus structures. Blend’s SMA model aligns with this direction.

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Federal agencies

• SEC. Rescinded SAB 121 in January 2025, removing the accounting rule that made crypto custody expensive for banks. The current administration has taken a more accommodating stance toward digital assets.
• OCC. Interpretive Letter 1183 (March 2025) removed the prior-approval requirement for banks engaging in crypto custody and stablecoin activities. This makes it easier for your banking partners to work with on-chain infrastructure.
• FinCEN. 2019 guidance on convertible virtual currencies states that non-custodial software developers are not money transmitters, provided they do not have “independent control” over user funds.

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State level

• New York (BitLicense). Requires licensing for “virtual currency business activity” involving NY residents. Non-custodial protocols that never possess or control user funds may fall outside this requirement, though NYDFS interprets “control” broadly.
• Wyoming. The most crypto-friendly state. Special Purpose Depository Institution (SPDI) charters for digital asset businesses. First state to legally recognize DAOs as LLCs.
• California. Digital Financial Assets Law (AB 39) took effect July 2025, requiring licensing for digital financial asset businesses.

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European Union

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MiCA (Markets in Crypto-Assets Regulation)

MiCA is the EU’s crypto regulatory framework. For non-custodial protocols, the key provision is Recital 83, which explicitly excludes non-custodial wallet providers from custody regulation. The test is control. MiCA Article 3(1)(17) defines custody as “safekeeping or controlling crypto-assets on behalf of clients.” If the protocol cannot move assets without user approval, no custody relationship exists. Article 75 (custody segregation) requires on-chain segregation of client assets from CASP assets. Blend’s SMA model satisfies this by design. Each user’s funds sit in their own isolated Safe. Even if custody rules applied, the architecture already meets them.

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Stablecoins under MiCA

Blend supports MiCA-compliant stablecoins for EU market access.

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Other EU regulations

• TFR / Travel Rule (effective December 2024). Requires originator and beneficiary info for crypto transfers via CASPs. Transfers between self-hosted wallets are exempt. The platform (as the CASP) bears this obligation.
• DORA (effective January 2025). Applies to CASPs. If Blend is not classified as a CASP, DORA does not apply directly. Platform partners must manage third-party ICT risk as part of their DORA obligations.
• AMLR (effective July 2027). Self-custodial wallets above EUR 1,000 will trigger enhanced due diligence when interacting with regulated entities. Peer-to-peer and self-custody use remain unrestricted.

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Member states

• France. PACTE/PSAN regime valid until July 2026. Fast-track MiCA authorization available.
• Germany. BaFin crypto custody license with EUR 150,000 minimum capital. MiCA transition deadline December 2025.

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Global

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Singapore

MAS regulates digital payment token custody under the Payment Services Act (amended April 2024). Non-custodial protocols are assessed on the degree of control over user assets. XSGD (issued by StraitsX) is substantively compliant with the MAS Single-Currency Stablecoin framework (finalized August 2023). Reserves are held at DBS and Standard Chartered.

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Brazil

BCB Resolutions 519, 520, and 521 (effective February 2026) mandate segregation of client assets from firm assets. Stablecoin transactions are classified as foreign exchange operations. BRZ (issued by Transfero) will be treated as an FX instrument under this framework. Firms must be authorized by November 2026 or cease operations.

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United Kingdom

The Property (Digital Assets etc) Act 2025 (Royal Assent December 2025) recognizes crypto as a third category of personal property under English law. This strengthens the legal argument that assets in a user’s Safe belong to the user. FCA custody rules (CASS 16/17 chapters) are expected to take effect October 2027.

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FATF

The Financial Action Task Force guidance (updated June 2025) states that DeFi software itself is not a Virtual Asset Service Provider (VASP). Software developers are not VASPs. However, “creators, owners, and operators who maintain control or sufficient influence” over a protocol may be classified as VASPs. The indicators include: ability to upgrade contracts, freeze funds, or control access. Blend’s non-upgradable contracts and absence of admin keys place it outside these indicators.

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Who does what

Blend’s structure carries part of the weight. Your compliance program carries the rest. See Compliance Controls for what each control does and what it can never do.

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What Blend’s architecture gives you

Building on Blend means your compliance posture starts from a strong foundation:

• Per-user fund isolation. Each user’s assets sit in their own Safe. No co-mingling.
• Non-custodial classification. Immutable contracts, no admin keys, and timelocked changes support non-custodial status across jurisdictions.
• On-chain audit trail. Every action on every Safe is recorded on-chain and verifiable.
• MiCA-compliant stablecoins. USDC, EURC, and other supported tokens meet regulatory requirements in their respective markets.
• Structural segregation. You get fund segregation as a property of the architecture, not as a process you have to manage.
• Platform opt-out. Your platform controls which whitelisted vault actions apply to your users. New actions require your approval through the timelock.

This is a strong starting point, not a compliance program. Yours still matters, and it stays yours.