Managing LLM provider API keys and virtual keys behind a governance proxy

Two kinds of credentials, two different jobs

Provider keys and virtual keys serve different purposes and should be handled differently. The provider key is the real credential for the model provider, and it stays in one controlled custody boundary. The virtual key is what each team, agent, or use case receives, and it has no value outside the proxy.

Credential flow through a governance proxy

Each request follows the same path, from the virtual key a consumer presents to the audit record the proxy leaves behind.

1. Virtual keyIssued per consumer, valid only at the proxy.
2. Policy bindingIdentity, model access, budget, rate limit, and expiry.
3. Provider keyHeld in a secret store and applied only at egress.
4. Audit recordEvery request tied to a key ID and a policy decision.

Components of the credential path

Names vary by product, but most designs contain the same responsibilities. Keep them separable so each can be secured and scaled independently.

Issuing, scoping, and binding virtual keys to policy

The proxy maps each virtual key to an identity and policy, then enforces model access, budgets, and rate limits on every request and logs the decision. Scoping therefore happens at issuance, when the key is bound to its policy.

• Every virtual key has an owner, an identity, an expiry, and a bound policy.
• The policy binding covers identity, model access, budget, rate limit, and expiry.
• The key and policy registry stores virtual key metadata, owner, scope, limits, and expiry.
• Virtual key secrets are stored hashed and shown once at issuance.

Rotation and revocation without redeployment

Because consumers hold only virtual keys, rotation and revocation happen centrally without redeploying applications. Provider key rotation and virtual key revocation should both be tested, and neither should need an application redeployment.

Audit, leakage, and failure handling

The audit pipeline records identity, policy decision, and outcome without recording secrets. Logs record key IDs and policy decisions, and secrets are redacted before storage. To limit leakage at the last step, provider egress substitutes the provider credential only there, with network egress limited to approved endpoints.

Failure modes for the proxy, the secret store, and the provider should be documented in advance.

Planning checklist

• Provider keys live only in a secrets manager, with restricted and audited access.
• Every virtual key has an owner, an identity, an expiry, and a bound policy.
• Virtual key secrets are stored hashed and shown once at issuance.
• Provider key rotation and virtual key revocation are tested and need no application redeployment.
• Logs record key IDs and policy decisions, and secrets are redacted before storage.
• Failure modes for the proxy, secret store, and provider are documented, with no direct-key fallback.