Approval Policy

Overview

Meaning and boundaries

Approval Policy is a formal set of conditions determining who must review or authorize a wallet, vault, account, or transaction action before execution. An approval policy specifies which actions need authorization, who is eligible to authorize them, and how many independent approvals are required. Policies may vary by payout value, destination changes, asset, network, account, or risk event; enforcement must happen before execution where the action is irreversible.

How it works in practice

A valid signature proves that the relevant signing authority approved a particular payload; it does not prove that the signer understood the request or that the request was economically safe. Payload interpretation and policy enforcement remain essential. It defines governance logic and can be enforced by software, smart contracts, custodians, or operating procedures. Operationally, policies specify thresholds, roles, amount tiers, destinations, asset types, time windows, segregation of duties, emergency paths, and change controls. The principal risk is that overly broad exceptions, stale approvers, policy bypasses, or ambiguous thresholds can nullify otherwise strong custody controls.

Checks and failure points

Avoid workflows in which one administrator can both create and approve a sensitive request. Log each decision and policy version, and establish emergency handling without allowing untracked bypasses.

Operational evidence and decisions

Different actions deserve different thresholds. A small routine payout might be preauthorized, while adding a beneficiary or changing settlement limits needs stronger review. Policies should define who can approve their own requested action, how conflicts are handled, and whether a completed authorization expires if execution is delayed.

How it differs from related terms

An approval policy is an organizational or software rule; multisig is a cryptographic enforcement mechanism that may implement part of that rule. Related entries: Offline Signing; Air-Gapped Signing; Secure Signing.