diff --git a/keys/README.md b/keys/README.md
new file mode 100644
index 00000000..db68d1a5
--- /dev/null
+++ b/keys/README.md
@@ -0,0 +1,81 @@
+# AITBC Keys Directory
+
+## 🔐 Purpose
+Secure storage for blockchain cryptographic keys and keystore files.
+
+## 📁 Contents
+
+### Validator Keys
+- **`validator_keys.json`** - Validator key pairs for PoA consensus
+- **`.password`** - Keystore password (secure, restricted permissions)
+- **`README.md`** - This documentation file
+
+## 🔑 Key Types
+
+### Validator Keys
+```json
+{
+  "0x1234567890123456789012345678901234567890": {
+    "private_key_pem": "RSA private key (PEM format)",
+    "public_key_pem": "RSA public key (PEM format)",
+    "created_at": 1775124393.78119,
+    "last_rotated": 1775124393.7813215
+  }
+}
+```
+
+### Keystore Password
+- **File**: `.password`
+- **Purpose**: Password for encrypted keystore operations
+- **Permissions**: 600 (root read/write only)
+- **Format**: Plain text password
+
+## 🛡️ Security
+
+### File Permissions
+- **validator_keys.json**: 600 (root read/write only)
+- **.password**: 600 (root read/write only)
+- **Directory**: 700 (root read/write/execute only)
+
+### Key Management
+- **Rotation**: Supports automatic key rotation
+- **Encryption**: PEM format for standard compatibility
+- **Backup**: Regular backups recommended
+
+## 🔧 Usage
+
+### Loading Validator Keys
+```python
+import json
+with open('/opt/aitbc/keys/validator_keys.json', 'r') as f:
+    keys = json.load(f)
+```
+
+### Keystore Password
+```bash
+# Read keystore password
+cat /opt/aitbc/keys/.password
+```
+
+## 📋 Integration
+
+### Blockchain Services
+- **PoA Consensus**: Validator key authentication
+- **Block Signing**: Cryptographic block validation
+- **Transaction Verification**: Digital signature verification
+
+### AITBC Components
+- **Consensus Layer**: Multi-validator PoA mechanism
+- **Security Layer**: Key rotation and management
+- **Network Layer**: Validator identity and trust
+
+## ⚠️ Security Notes
+
+1. **Access Control**: Only root should access these files
+2. **Backup Strategy**: Secure, encrypted backups required
+3. **Rotation Schedule**: Regular key rotation recommended
+4. **Audit Trail**: Monitor key access and usage
+
+## 🔄 Migration
+
+Previously located at `/var/lib/aitbc/keystore/` - moved to `/opt/aitbc/keys/` for centralized key management.