Collaborative Custody is a multisignature ( multisig) custody setup that allows for the distribution of key ownership across various entities. In collaborative custody, a business or individual retains ownership of a controlling share of keys within the setup while outsourcing the remaining keys to a trusted third party. Many institutional custodians offer collaborative custody services, reducing the risks inherent in both fully outsourced and self-custody models.

This setup prevents unauthorized access to private keys and reduces the risk of hacking, as there is no single point of failure. By distributing the burden of security among several trusted parties, collaborative custody enhances the overall safety and reliability of asset management.