System and method for proxy-based credential custody with distributed validation

Abstract

The present disclosure provides a distributed credential custody system that fundamentally separates credential possession from credential usage. The system eliminates the primary vulnerability of conventional API security by storing actual access credentials within a secure credential management system while providing clients only with opaque credential handles that cannot be independently used for authentication. Multiple independent authenticators perform distributed validation using hardware-anchored mechanisms, with each authenticator contributing weighted partial decryptions based on their assurance levels. The credential management system reconstructs plaintext credentials only after achieving threshold consensus from authenticators, then provides reconstructed credentials to a proxy. This architecture prevents credential theft from client systems while maintaining compatibility with existing authentication protocols, enabling organizations to implement zero-trust principles without requiring modifications to client applications or backend services. The distributed trust model ensures no single component can independently access complete credentials, providing enhanced security through cryptographic isolation and policy-driven authentication that adapts to real-time risk assessment.