Custody-as-a-Service for regional banks can be rolled out in a quarter by combining threshold-signing MPC with FIPS 140‑3 HSMs, ISO 20022-native screening, and bank‑grade third‑party risk controls. With SAB 121 rescinded and OCC guidance clarified, the business case is finally aligned with a compliant, low‑capex, white‑label deployment. (sec.gov)

Custody‑as‑a‑Service: White‑Label Solutions for Regional Banks

Target audience: CIO/CTO, Head of Digital Banking, Chief Risk Officer, BSA/AML Officer, and Ops leaders at U.S. regional banks (assets $5B–$100B) running Jack Henry Banno, FIS Code Connect, or Fiserv cores.

Keywords they care about (and we implement): Jack Henry Banno API, FIS Code Connect, Fiserv Signature Developer Studio, ISO 20022 CBPR+ end of coexistence (Nov 2025), FIPS 140‑3 Level 3 HSM, FROST threshold signatures, PQC (FIPS 203 ML‑KEM / FIPS 204 ML‑DSA / FIPS 205), FFIEC third‑party risk, OCC IL 1183/1184, SAB 122, FATF/EBA “Travel Rule,” NYDFS sub‑custodian guidance, Basel cryptoasset disclosure (Jan 2026). (swift.com)

Hook — The technical headache blocking your board’s 2026 roadmap

Your board wants a concrete date for digital‑asset custody. But your core isn’t ready, your InfoSec insists on HSMs, risk wants FFIEC‑grade third‑party controls, compliance demands Travel Rule and ISO 20022 mapping, and finance wants clarity on capital/GAAP. Meanwhile:

• Swift ends the MT/ISO 20022 coexistence in November 2025 for cross‑border payment instructions—your sanctions and KYC data must be ISO‑native. (swift.com)
• The Basel Committee’s cryptoasset disclosure framework and targeted standard amendments go live January 1, 2026—your reporting stack must segment exposures, stablecoin treatment, and liquidity metrics. (bis.org)
• OCC Interpretive Letters 1183/1184 confirm banks may provide crypto custody (including via sub‑custodians/outsourcing) without prior supervisory non‑objection—provided controls are bank‑standard. (occ.gov)
• SAB 121 is gone (rescinded by SAB 122, effective January 30, 2025), removing the balance‑sheet “custody liability” overhang for SEC registrants. (sec.gov)

Agitate — The cost of waiting: missed deadlines, stranded revenue, and avoidable rework

• Miss the ISO 20022 cutoff and you’ll re‑plumb transaction‑screening twice—first for legacy MT, then again for CBPR+—while creating data‑loss risk mid‑journey. That’s avoidable rework. (swift.com)
• Basel’s Jan 2026 disclosures require standardised tables on crypto exposures; retrofitting this after launch means re‑mapping custody ledger fields and wallet policies to capital buckets under time pressure. That’s reporting debt. (bis.org)
• DORA is now binding in the EU (Jan 17, 2025). If you have EU branches or EEA clients, contracts with crypto sub‑custodians and cloud providers will be examined for “critical ICT” dependencies and resilience. That’s scrutiny without architecture. (enisa.europa.eu)
• FATF and the EBA expect real Travel Rule enforcement (information‑complete transfers) from Dec 30, 2024 in the EU, with many jurisdictions still lagging—meaning your cross‑border flows need policy‑driven data collection and rejection handling on day one. That’s a sanctions/tipping‑off trap if bolted on later. (eba.europa.eu)
• FIPS 140‑2 modules go historical Sept 21, 2026. Rebuilding HSM integrations after launch to meet 140‑3 will burn budget and scare auditors. That’s a compliance cliff. (csrc.nist.rip)

Solve — 7Block Labs’ white‑label custody blueprint (technical but pragmatic)

We ship a custody stack that your risk, audit, and core teams can sign off—because it mirrors banking controls, plugs into your core, and is future‑proofed for PQC and ISO 20022.

1) Key and signing architecture (security‑first, auditor‑ready)

• Threshold signatures: FROST‑style two‑round Schnorr for supported chains; ECDSA/EdDSA curves via TSS where required. Benefits: no single HSM holds a full private key, signer sets are crypto‑agile, and policies are enforced at the threshold layer. (rfc-editor.org)
• Dual‑control co‑signing: At least one share in a FIPS 140‑3 Level 3 HSM (e.g., Luna 7); other shares in isolated signers with rate‑limited or enclave‑backed execution. No hot‑key monocultures. (data-protection-updates.gemalto.com)
• PQC‑ready backups: Encrypt shard escrow and recovery payloads with ML‑KEM (FIPS 203) and sign escrow manifests with ML‑DSA (FIPS 204) in hybrid mode; maintain LMS (FIPS 205) for hardware‑constrained flows. A concrete PQC migration path from day zero. (csrc.nist.gov)
• Roadmap compliance: We design to the 140‑2 sunset (Sept 21, 2026) and CMVP processes now—avoiding revalidation churn mid‑program. (csrc.nist.rip)

What this delivers:

• Provable separation of duties (M‑of‑N, policy quorum, signer diversity).
• Disaster‑recovery RTO/RPO under 60/15 using escrowed, PQC‑wrapped shards and geo‑redundant attestations.
• Change‑control with evidence: each policy update produces an immutable config hash and reviewer signatures.

2) Policy engine + compliance automation (Travel Rule, sanctions, ISO 20022)

• Pre‑send controls:
  • ISO 20022 message mapping for payment party fields; reject or hold transactions with missing originator/beneficiary identifiers to meet CBPR+ end‑of‑coexistence and Travel Rule data sufficiency. (swift.com)
  • On‑chain allow/blocklists + off‑chain KYC lookups; case routing that logs “detection → cure → re‑screen” with auditable timestamps.
• EU/UK coverage: Implement the EBA’s 2024 Travel Rule Guidelines (data fields, remediation workflows) and align with FATF’s 2024/2025 updates on cross‑border enforcement and stablecoin risk. (eba.europa.eu)
• U.S. alignment: OCC IL 1183/1184—explicit support for sub‑custody/outsourcing with bank‑grade third‑party risk; map controls to the 2023 Interagency TPRM guidance plus the 2024 Fed CA 24‑2 memo. (occ.gov)

3) Core banking integration (Jack Henry, FIS, Fiserv) without rip‑and‑replace

• Jack Henry Banno: OAuth2/OIDC SSO, Admin/Consumer APIs, and Banno Plugin framework tie custody UX into digital banking with native permissions and reporting. Single customer identity, no data‑copy sprawl. (jackhenry.dev)
• FIS Code Connect: We expose custody events (deposit/withdrawal, fee capture) as core ledger entries and leverage Code Connect’s 700+ APIs for KYC/KYB and treasury workflows—proven API ROI accelerates your business case. (fisglobal.com)
• Fiserv (Signature/Developer Studio): We align to Banking Hub and Signature connectors for account posting, customer profile sync, and statements; we plan cut‑over with your Developer Studio workspaces. (appmarket.fiservapps.com)

Where 7Block Labs plugs in:

• Integration accelerators via our blockchain integration, web3 development services, and custom blockchain development services, plus controls validated by our security audit services.

4) Reporting and attestations (Basel 2026 + board communications)

• Basel cryptoasset disclosures: We tag wallet classes to Group 1/2 and stablecoin criteria so your risk can populate the Committee’s standardised tables in 2026 with one‑click extracts. (bis.org)
• “Trust without leaking PII”: Optional Merkle‑tree proofs and ZK attestations that show 1:1 reserves to auditors and clients without revealing addresses—adopting best practices from PoR leaders. (blog.kraken.com)

5) Procurement‑ready deliverables (what your committees will ask for)

• FFIEC Third‑Party Risk artifacts: service description, dependency map (incl. cloud/HSM CSPs), control library mapped to Interagency TPRM, DORA‑aligned incident playbooks, NYDFS sub‑custodian structure alignment. (fdic.gov)
• Crypto policy pack: wallet policy matrix, Travel Rule SOPs, sanctions re‑screening logic, ISO 20022 field mapping, compensating controls for unhosted wallets, plus annual test calendar.
• Technical runbooks: HSM lifecycle (firmware/FIPS updates), shard rotation ceremony, signer quorum change, emergency pause.

Relevant 7Block Labs offerings you can link into scope:

• smart contract development for custody workflows like scheduled payouts and escrow.
• cross‑chain solutions development to move assets securely across L2s/sidechains.
• asset tokenization for deposit‑like token pilots when your legal team is ready.

Practical examples (grounded in 2025–2026 requirements)

1. U.S. regional bank on Jack Henry Banno with EU wealth clients

• Problem: Launch BTC/ETH custody for HNW clients while serving a Luxembourg branch subject to DORA and EU Travel Rule; board wants ISO 20022‑aligned sanctions logs, and finance asked whether SAB 121 still applies.
• Solution:
  • Threshold policy: 2‑of‑3 (Ops HSM, Risk HSM, automated policy signer), with FIPS 140‑3 Level 3 HSMs and signer diversity; shard backups encrypted under ML‑KEM with quarterly test restores. (data-protection-updates.gemalto.com)
  • Banno integration: use Admin/Consumer APIs for SSO and roles; display Travel Rule completeness before “Send.” (jackhenry.dev)
  • Compliance: cite OCC IL 1183/1184 for permissibility and outsourcing/sub‑custodians; confirm SAB 122 rescission of SAB 121 for GAAP presentation; add EBA Travel Rule checks for EU transfers. (occ.gov)
  • Outcome: board‑ready pack showing ISO 20022‑mapped screening logs that survive the Nov 2025 CBPR+ shift and a Basel‑ready exposure export for 2026. (swift.com)

1. U.S. bank on FIS Code Connect targeting treasury clients using USDC settlement

• Problem: Need rapid ERP‑to‑custody posting and OFAC/Travel Rule gates without rebuilding core.
• Solution:
  • Use Code Connect posting and KYC APIs for unified ledger entries; custody policy enforces pre‑send TR data, sanctions check, and “execution hold” if ISO fields are incomplete.
  • Quantified business case references independent TEI study: 193% ROI for API enablement via Code Connect—helps your CFO approve the pilot. (fisglobal.com)

1. NYDFS‑supervised trust sub‑custodian model

• Problem: Clarify beneficial interest, segregation, and sub‑custodian controls.
• Solution: Align contracts/runbooks to NYDFS 2025 updated guidance (insolvency, sub‑custodians, disclosures) and map our segregation model (omnibus vs. segregated addresses) to that guidance. (dfs.ny.gov)

Best emerging practices we implement now (so you don’t re‑platform in 2026)

• PQC‑hybrid from day one: Encrypt all long‑term key backups with ML‑KEM and sign recovery manifests with ML‑DSA; keep LMS as a hardware‑friendly fallback. This avoids a 2026/27 crypto‑agility retrofit. (csrc.nist.gov)
• Threshold‑first signing: Prefer FROST/TSS over single‑HSM keys for signer diversity and operational resilience; bind business policy to quorum (amount limits, velocity, counterparties). (rfc-editor.org)
• ISO 20022‑native screening: Do not “bolt‑on” Travel Rule; instead, collect required originator/beneficiary fields before signing and persist CBPR+ fields in your case system. (swift.com)
• Outsourcing with evidence: Structure sub‑custodian contracts and cloud/HSM vendors under Interagency TPRM and OCC IL 1184; include resilience SLAs, pen‑test rights, and exit plans that meet DORA “critical ICT” expectations if you have EU nexus. (fdic.gov)
• Basel‑ready data model: Tag wallets to Basel groupings, stablecoin criteria, and liquidity buckets so disclosures become extracts—not projects—in January 2026. (bis.org)

Implementation plan — 12 weeks to “board demo” and compliance sign‑off

• Weeks 1–2: Target‑state design, control mapping (OCC IL 1183/1184; Interagency TPRM), PQC/key ceremonies, ISO 20022/Travel Rule data model. Deliverables: architecture, RACI, test plan. (occ.gov)
• Weeks 3–4: HSM provisioning (FIPS 140‑3), signer diversity setup (FROST/TSS), vault and escrow encrypted under ML‑KEM. Deliverables: ceremony records. (data-protection-updates.gemalto.com)
• Weeks 5–8: Core integration (Banno or Code Connect or Fiserv), sanctions/Travel Rule pre‑send gates, ISO 20022 export, NYDFS sub‑custodian alignment if applicable. Deliverables: UAT build. (jackhenry.dev)
• Weeks 9–10: DR/BCP tests, red‑team exercise on policy bypass, auditor dry‑run of Basel/board reporting.
• Weeks 11–12: Limited‑scope launch with internal treasury + 10 pilot clients; roll up metrics and go/no‑go.

We staff with:

• Core integration engineers + ZK/Solidity specialists via our web3 development services.
• Compliance engineers to codify Travel Rule/ISO 20022 policy gates and deliver your regulator‑facing documentation via our security audit services.
• Product/GTM enablement to package custody inside your mobile/web with our dApp development accelerators.

Prove — GTM metrics that matter to regional banks

We tie engineering to business outcomes:

• Time‑to‑market: ≤ 90 days to limited pilot (with real clients) on Jack Henry/FIS/Fiserv.
• Cost to integrate: Use of vendor APIs cuts custom core work; industry evidence shows API‑led integrations can deliver triple‑digit ROI (FIS Code Connect TEI: 193% NPV over three years), strengthening your board case. (fisglobal.com)
• Operational risk: Zero single‑point key risk (threshold + HSM), RTO ≤ 60 minutes, RPO ≤ 15 minutes for shard recovery; 100% signed policy changes with reviewer provenance.
• Compliance SLA: 100% Travel Rule field completeness on outbound; ISO 20022 logs ready before the Nov 2025 cutover; Basel 2026 disclosures generated from tagged exposure data—no late‑year scrambles. (swift.com)
• Revenue enablement: Treasury and wealth segments onboarded with custodied BTC/ETH/USDC, enabling cross‑sell (escrow, settlement, custody fees) with transparent board‑level reporting.
• Vendor risk posture: Contracts execute against Interagency TPRM, OCC IL 1184 outsourcing, DORA oversight (if applicable), and NYDFS sub‑custodian expectations—reducing examiner friction. (fdic.gov)

Brief in‑depth details (why this works technically and with regulators)

• The SAB 121 overhang is gone (SAB 122 rescission, Jan 23, 2025), simplifying GAAP and capital optics for custody services provided by SEC registrants. Finance can focus on fee income and operational risk—rather than a synthetic liability. (sec.gov)
• OCC IL 1183 rescinds IL 1179’s “non‑objection” hurdle; IL 1184 clarifies banks can perform custody and execution and may outsource to sub‑custodians—subject to strong risk management. This is your legal runway to white‑label. (occ.gov)
• ISO 20022 CBPR+ end‑of‑coexistence in Nov 2025 means native, structured compliance data; our custody stack captures and persists those fields alongside your Travel Rule evidence—so you pass audits during and after the migration. (swift.com)
• Basel’s 2026 disclosure framework requires qualitative and quantitative templates for crypto exposures. We bind wallet policies to categories that drive those templates—so risk reporting is automated, not ad‑hoc. (bis.org)
• DORA is live; EU supervisors will scrutinize “critical ICT” providers and contracts. Our vendor pack (runbooks, SLAs, exit plans) anticipates this—so your EU nexus doesn’t derail U.S. launch. (enisa.europa.eu)

---

If you want this delivered with accountable engineering and a board‑worthy controls narrative, we’ll assemble your pilot with:

• custom blockchain development services for custody core, policies, and KMS integration.
• blockchain integration to your chosen core (Banno, Code Connect, Fiserv).
• security audit services for policy/Travel Rule/ISO 20022/DORA/TPRM mapping and test evidence.

---

Call to action (specific and personal):
If you’re the CIO/CTO or Head of Digital at a U.S. regional bank running Jack Henry, FIS, or Fiserv and your board wants a custody pilot live before November 2025 ISO 20022 cutover and Basel’s January 2026 disclosures, book a 45‑minute readiness review with 7Block Labs this week—we’ll return a dated, board‑ready plan (architecture, control map, core integration scope, and pilot KPI targets) within 10 business days or we’ll comp the engagement.