> ## Documentation Index
> Fetch the complete documentation index at: https://developers.circle.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Direct end-user custody model

> Understand how Circle's Direct End-User Custody model works for Stablecoin Accounts

Digital Asset Accounts operates under Circle's Direct End-User Custody model,
where Circle holds custody of digital assets on behalf of end customers while
distributors provide the user interface.

## Direct end-user custody defined

In the Direct End-User Custody model, Circle holds custody of the digital assets
(stablecoins) on behalf of the end customer directly. The distributor acts as a
technology integrator that provides the user interface and experience but does
not take custody of or control the underlying funds.

This model provides several advantages:

* **Regulatory clarity**: Circle, as the custodian, is responsible for
  compliance with applicable custody regulations
* **Reduced distributor obligations**: Distributors are not required to obtain
  money transmitter licenses or custody licenses for the stablecoin holdings
* **End-customer protection**: Funds are held by a regulated entity with robust
  security and compliance infrastructure

## How it works

### Beneficial ownership

Each end customer is the beneficial owner of the stablecoins held in their
account. Although the assets are pooled in Circle's custody infrastructure, the
beneficial ownership is tracked at the individual account level.

### Account segregation

Digital Asset Accounts maintains logical segregation of funds at the
[sub-account level](/digital-asset-accounts/concepts/account-structure). Each
sub-account tracks the balance for a specific end customer and currency. The
underlying custody may use omnibus wallet structures (a single blockchain wallet
that pools assets from multiple customers) for operational efficiency, but
account records ensure that each customer's entitlements are clearly defined and
auditable.

### Distributor responsibilities

Under the Direct End-User Custody model, the distributor is responsible for:

* Providing the user interface for their end customers to interact with their
  accounts
* Onboarding end customers through the
  [End User Onboarding API](/end-user-onboarding), which handles KYB data
  collection and document submission
* Integrating with the Digital Asset Accounts API to enable account operations
  such as
  [wire deposits and withdrawals](/digital-asset-accounts/howtos/wire-deposits-and-withdrawals)
  and [crypto transfers](/digital-asset-accounts/howtos/crypto-transfers)

The distributor is **not** responsible for:

* Holding or controlling customer funds
* Managing compliance or regulatory obligations related to custody
* Performing KYB or KYC verification (Circle handles this)

## Compliance

Circle manages the compliance obligations associated with digital asset custody,
including:

* **KYB verification**: Circle performs Know Your Business verification on all
  end customers before activating their accounts
* **Transaction monitoring**: Circle monitors transactions for suspicious
  activity and compliance with applicable regulations
* **Risk management**: Circle applies risk ratings and transaction limits based
  on the verified profile of each end customer

For more information on risk ratings and limits, see
[Limits and risk ratings](/digital-asset-accounts/concepts/limits-and-risk-ratings).