Who holds your assets? Custody on a crypto exchange and in India's stock market
After Binance reported about $6.3 billion in unauthorised withdrawals, a look at how listed shares are held in India: depositories, brokers and clearing, and what that separation does and does not protect.
First published 1 Nov 2026 · 4 min read · incident details as reported up to 1 Nov 2026
Figures as reported by the exchange and in news coverage; not independently verified.
On 29 October, Binance reported unauthorised withdrawals worth about $6.3 billion. By 1 November it said it had covered around 95% of the affected assets and was restoring withdrawals in phases. A recovery on that scale is a large undertaking, and it also shows what a customer of a crypto exchange relies on: the platform's security, its financial resources, and its decision to make users whole.
Indian listed shares are held differently. This piece describes the difference. It is background on how custody is arranged, not a comparison of how safe any one platform is.
How assets are usually held on a crypto exchange
On a centralised exchange, a customer typically deposits coins into wallets the exchange controls. What the customer sees as "my balance" is an entry in the exchange's own records, and it is a claim on the exchange. Buying, selling and withdrawing all happen inside the platform's systems. That is convenient, and it also means one organisation's security, reserves and decisions sit between the customer and the asset. When something goes wrong at the platform, the customers who share it are affected together, and what happens next depends largely on what the platform can and chooses to do.
How listed shares are held in India
Shares bought on NSE or BSE follow a different path, with the ownership record kept apart from the trading service:
- Youdeposit coins, place orders, ask to withdraw
- The exchange platformmatches and settles inside its own system
- Exchange-controlled walletshold the coins
- Your balancean entry in the exchange's books: a claim on the exchange
- Youplace an order and approve a sale
- Brokertrading app and depository participant: passes on instructions
- Stock exchange and clearing corporationmatch and settle the trade, standing between buyer and seller
- Depository (CDSL or NSDL)keeps the record of who owns the shares, in your name
- Your bank accountreceives sale proceeds through the broker
- 1The record
Shares sit in a demat account, held electronically in the investor's name with a depository, CDSL or NSDL. The broker is usually the depository participant: it opens the account and passes on instructions, but the depository keeps the record of who owns what.
- 2The trade
The order goes through the broker to the stock exchange. A clearing corporation then settles it, acting as the counterparty to both sides. Equity trades settle on a T+1 cycle, meaning one working day after the trade.
- 3The movement
On a sale, the shares move from the seller's demat account through the clearing process to the buyer's, and the money moves through clearing banks. The sale proceeds reach the investor's registered bank account through the broker.
- 4The authorisation
Selling shares from a demat account normally needs the investor's own approval, for example through the depository's electronic delivery instruction (eDIS) process, unless the investor has given a power of attorney.
- 5Margin
Since 2020, shares offered as margin are pledged through the depository system and stay in the investor's own demat account, rather than being moved into a broker's account.
- 6The paper trail
Depositories send transaction alerts and statements to the investor directly, not only the broker.
The two arrangements side by side
| Question | Crypto on an exchange (in general) | Listed shares in India |
|---|---|---|
| Where is ownership recorded? | Usually in the exchange's own books: the customer holds a balance, which is a claim on the exchange. | In the investor's demat account, kept by a depository (CDSL or NSDL), in the investor's name. |
| Who carries out a sale? | The exchange moves the balance inside its own system. | The broker passes the order to the stock exchange; the clearing corporation settles it and the depository moves the shares. |
| Who stands between buyer and seller? | The platform itself. | A clearing corporation, which becomes the counterparty to every trade it clears. |
| Where do sale proceeds go? | Into the customer's balance on the platform, to be withdrawn later. | Through the clearing system and the broker to the investor's registered bank account. |
| Which framework applies? | Depends on the country and the platform; the securities safeguards described here do not cover crypto assets. | SEBI's rules for brokers, depositories and clearing corporations, plus the exchanges' own safeguards. |
What the separation changes
Because the record of ownership sits with a depository, a security breach at a broker is not the same event as a breach at the place where the shares are recorded. It does not automatically mean the shares were held in the broker's own account and have gone. Several layers sit between an investor's ownership and a single trading platform:
- Depositories keep the record of who owns the shares
- Clearing corporations settle trades and stand between buyer and seller
- SEBI's rules keep client money and securities apart from a broker's own
- Investor protection funds run by the exchanges; can compensate clients of a defaulting broker, within limits
- SCORES SEBI's system for investor complaints
What the separation does not remove
These layers reduce some risks. They do not remove all of them:
An account can still be reached through stolen log-in details, a fake app or a hijacked phone number, and orders can be placed from it.
Money held with a broker, such as an unused balance, sits on the broker's side of the arrangement.
Safeguards have been tightened because they were tested. In 2019 a large broker was found to have misused clients' shares held under a power of attorney, and the margin rules above came afterwards.
Compensation funds have limits and conditions, and recovery after a failure can take time.
Two questions that apply to any platform
Read this way, the incident raises two questions that are not specific to crypto. The answers differ by asset and by arrangement, which is the point of the comparison above.
Where is an asset recorded?
What stands between that record and the platform if the platform is compromised?
What this piece can't tell you
This is one reported incident whose details may change, and the summary of it is only as complete as the reports it draws on. The description of Indian custody is the general structure, not the arrangement of any particular broker, bank or exchange. Rules and limits are revised from time to time, so the depositories' and SEBI's own pages are the place to check current ones. Nothing here assesses how safe any platform is, compares returns, or is investment, legal or tax advice.
Related reading: what a share is and how exchanges work and the glossary in Learn.
Educational background, not a view on any company, platform or asset, and not investment, legal or tax advice. Past patterns do not tell you what will happen next. Disclaimer