tZERO Group, Inc., a blockchain-powered multi-asset infrastructure provider, announced that its broker-dealer subsidiary's alternative trading system can now facilitate trading of crypto asset securities directly custodied on-chain by customers in their own self-hosted wallets. This development enables transactions to be settled directly by customers on-chain, marking a critical advancement in the convergence of traditional finance and decentralized finance ecosystems.
The capability represents another step in tZERO's convergence strategy, offering an additional bridge between traditional finance and the broader decentralized finance ecosystem for customers and API partners. By supporting integrated self-hosted wallets, tZERO enables customers to interact with its regulated ATS without relinquishing control of their private keys or assets to middleman custody. As one of only two broker-dealers who have been custodying securities directly on-chain in its own wallets, tZERO will continue to offer omnibus or individual wallet custody alongside self-hosted wallet connectivity for investors who prefer broker-dealer custody for operational, regulatory or other reasons.
"We are fast becoming the connective tissue for market participants across all vectors of Web3," said Alan Konevsky, CEO of tZERO. "By enabling custody and settlement via self-hosted wallets, we are providing the optionality that the market demands while pointing at the endstate of this revolution - compliant and transparent marketplaces that rely on self-regulating technology and asset sovereignty to deliver a cross-asset, cross-border and cross-protocol, AI-enabled investing experience."
A central pillar of this forthcoming feature is custodial optionality. tZERO's brokerage platform can now support a hybrid approach for custody, recognizing that different market participants have varying preferences. Customers will have the option to directly custody their own assets on-chain using self-hosted wallets or broker-dealer custody, allowing for seamless movement between traditional finance and the decentralized ecosystem.
"With this new capability, we continue to demonstrate our commitment to advancing innovation in a responsible manner, while working with regulators," added Vanessa Savino, Chief Legal Officer of tZERO. "Regulatory clearance to be interoperable with user self-hosted wallets promotes crypto asset programmability, portability, and transparency in our brokerage ecosystem."
tZERO plans to integrate key management and wallet infrastructure providers in the first half of 2026 to support secure, compliant settlement workflows involving self-hosted wallets. The company's services will be available to institutional API partners who elect to use tZERO's infrastructure versus building their own, which represents significant operational efficiency even in more permissive regulatory climates.
This development is important because it addresses a fundamental tension in digital asset markets between regulatory compliance and user sovereignty. By creating a regulated pathway for self-custodied assets to participate in traditional market structures, tZERO is potentially reducing barriers to institutional adoption while preserving the core principles of decentralization. The hybrid custody model acknowledges that different investors have varying risk tolerances, technical capabilities, and regulatory requirements, creating a more inclusive financial ecosystem.
The implications extend beyond individual investors to the broader financial industry. As traditional financial institutions increasingly explore digital asset opportunities, infrastructure that bridges regulatory requirements with blockchain-native features becomes essential. tZERO's approach could serve as a model for how regulated entities can engage with decentralized technologies while maintaining compliance standards. The company's position as one of only two broker-dealers custodying securities directly on-chain gives it unique insight into the technical and regulatory challenges of this convergence.
For the world of decentralized finance, this development represents increased legitimacy and potential capital inflows from traditional finance participants who require regulatory compliance. The ability to maintain self-custody while accessing regulated trading venues addresses concerns about counterparty risk and asset control that have limited institutional participation in DeFi. As noted in the company's investor notice, digital asset securities may not be "securities" as defined under the Securities Investor Protection Act, and protections afforded to securities customers under SIPA may not apply, particularly for digital asset securities that are "investment contracts" under the Howey test but are not registered with the Securities and Exchange Commission. More information about tZERO Digital Asset Securities may be found on FINRA's BrokerCheck.
The move toward self-regulating technology-based financial services ecosystems represents a significant shift in how markets could operate in the future. By combining blockchain transparency with regulatory oversight, platforms like tZERO's could create more efficient, accessible, and resilient financial markets. The company's forward-looking statements indicate plans to continue evolving its infrastructure, though actual results may differ due to various factors including regulatory developments and competition. As the financial industry continues its digital transformation, developments like tZERO's self-hosted wallet integration will likely influence how traditional and decentralized systems interact and evolve together.
