Custody models overview
Rehive does not manage end-user funds. We create the tools for our clients to manage funds as a custodian for their users. Rehive’s clients typically have to integrate with underlying store-of-value providers such as banks, blockchain networks, or payment gateways. While account balances and transactions are represented on the Rehive ledger, the actual funds are stored in external accounts like bank accounts or cryptocurrency addresses.
User balances in Rehive can be linked to an external store-of-value in two ways: either a direct one-to-one mapping (aka segregated accounts), where every account for end-users on Rehive represents an account on the external store-of-value or a many-to-many mapping (aka omnibus accounts) where the funds for multiple end-users are stored in a single account on the external store-of-value. The implementation of cash-in and cash-out varies depending on the custody model.
To re-iterate: Rehive is positioned as a software service provider of transaction systems. Rehive is not licensed as a financial services provider, however, our clients are required to meet any regulatory or licensing requirements for their business case and jurisdiction. Typically the licensing requirements for implementing the one-to-one custody model, rather than the many-to-one custody model are more stringent in most jurisdictions.
One-to-one (aka segregated accounts)
Every account on Rehive represents an account on the store-of-value provider (e.g. bank). The balance in each Rehive account exactly matches that of the corresponding account in the store-of-value provider’s system.
Many-to-one (aka omnibus accounts)
The funds related to multiple account balances on Rehive are stored in a single account on the store-of-value provider (e.g. bank or blockchain). When managing funds for users in this way, it is the company’s responsibility to ensure that all user funds are accounted for, i.e. the sum of all the applicable balances in Rehive matches the balance in the external account.