Blog: Wealth Planning And Advice

Fiduciary risk behaves differently from every other risk on a bank's balance sheet, and the differences explain why trust departments need a control structure rather than good intentions.

The exposure is not capped by the transaction. A credit loss is bounded by the loan amount. A fiduciary breach is bounded by the harm, which can exceed the account's value and bears no relationship to the fee the bank earned.

The tail is long. Claims arrive ...

Most community banks will never custody a digital asset. Nearly all of them will encounter crypto anyway, through channels that have nothing to do with holding it — and the exposure that has actually damaged banks came through the least exotic channel available.

Where Exposure Actually Reaches a Bank

Deposits from crypto businesses. Exchanges, miners, payment processors, custodians, and their principals hold operating accounts. This is by far the most