What is Wallet as a Service (WaaS)?

Wallet as a Service (WaaS) is infrastructure delivered through an API or SDK that lets a business offer crypto wallets to its users without building the underlying key management and blockchain connectivity itself. The WaaS provider runs the cryptographic engine, the custody layer, and the node infrastructure connecting to each blockchain. The business integrates at the API level and builds its own product on top.

Building this infrastructure from scratch typically takes 6 to 18 months and requires specialized cryptography talent that most companies do not have in-house. WaaS exists to skip that build entirely.

How does WaaS work?

A WaaS provider handles the parts of wallet infrastructure that are hardest to get right: generating and securing private keys, connecting to multiple blockchain networks, and signing transactions safely. The business calls the provider's API to create a wallet, request a transaction, or check a balance, without touching the cryptography directly.

Most WaaS platforms support one or more of four custody models:

• Custodial: The provider holds the private keys directly. Simple to operate, but creates a single point of failure if the provider is compromised.
• Non-custodial: The end user holds their own keys. Maximum control, but the user is fully responsible for recovery if keys are lost.
• MPC (multi-party computation): The private key is split into shares distributed across multiple parties. No single party ever holds the complete key, and signing requires cooperation between shares.
• TSS (threshold signature scheme): A related cryptographic approach where a threshold number of parties must combine partial signatures to produce a valid one, without ever reconstructing the full key.

Why has MPC become the dominant custody model?

MPC has become the standard approach for consumer-facing WaaS because it solves the recovery problem that plagues both other models. A pure custodial wallet concentrates risk in the provider. A pure non-custodial wallet loses funds permanently if the user loses their seed phrase. MPC splits the difference. No single party holds a complete key. There is no seed phrase to lose and no single point of compromise to exploit.

This distinction became very concrete in February 2025. Bybit, a major exchange, lost $1.5 billion in a single attack on one of its Ethereum cold wallets, the largest single crypto theft in history. Chainalysis recorded over $2.17 billion stolen from crypto services in the first half of 2025 alone, driven largely by that one incident. The Bybit hack is widely cited in the WaaS industry as the clearest illustration of why concentrated custodial key infrastructure remains a high-value target.

What is the difference between WaaS and custodial vs. non-custodial wallets?

These are related concepts operating at different levels. Custodial and non-custodial wallets describe who controls the private keys for a given wallet. WaaS is the delivery model. It is infrastructure a business buys or builds to offer wallets to its users, and it can be built on a custodial, non-custodial, MPC, or TSS foundation.

Custodial versus non-custodial answers "who holds the keys?" WaaS answers "how does a business get wallet functionality into its product at all?" A company can choose a custodial WaaS provider or a non-custodial one. WaaS itself is not a custody model. It is the infrastructure layer beneath whichever model is chosen.

Why does WaaS matter for stablecoin payment platforms?

For platforms building stablecoin payment products, wallet infrastructure is foundational but rarely the differentiated part of the business. A neobank or PSP wants to move stablecoins reliably for its customers, not spend a year and a half building key management from first principles.

WaaS gives a platform three things through a single integration:

• Wallet issuance: Creating wallets for customers or internal use without building key generation and storage
• Balance and signing: Holding stablecoin balances and signing transactions through an API, with custody handled by the provider
• Multi-chain connectivity: Reaching multiple blockchain networks without maintaining node infrastructure for each one

This connects directly to how stablecoin orchestration platforms operate. The wallet layer is one component of a broader infrastructure stack that also handles chain routing, fiat conversion, and compliance.

The build-versus-buy decision also has a compliance dimension. Every wallet a platform issues needs wallet screening and KYT coverage regardless of which custody model underlies it. Evaluating a WaaS provider means checking two things:

• Whether the cryptography and custody model fit the platform's risk tolerance
• Whether compliance tooling is built into the same platform or has to be integrated separately