diff --git a/doc/AGENT-IDENTITY.md b/doc/AGENT-IDENTITY.md
index c10108092dd..cebdf9c8216 100644
--- a/doc/AGENT-IDENTITY.md
+++ b/doc/AGENT-IDENTITY.md
@@ -44,6 +44,13 @@ before its next turn. Private values are excluded from invocation metadata and
 execution configuration; output and failure diagnostics redact known private
 material. The run-log redactor handles split stdout/stderr chunks independently.
 
+Managed remote providers, including Cursor Cloud, receive the same private key
+as managed local processes. Selecting a runtime therefore trusts its host with
+the agent's persistent identity: the agent and its host can retain the key and
+sign outside Paperclip. Encryption at rest protects database storage, not an
+executing runtime. Move an agent only between runtime hosts trusted with that
+identity.
+
 Independently hosted HTTP and gateway agents, including Runner's API-hosted Claude Managed and AWS AgentCore providers, do not receive private keys in v1.
 Their new agent records still get stored identities; their existing records stay
 unprovisioned until a supported managed run.
diff --git a/packages/adapters/cursor-cloud/src/server/execute.test.ts b/packages/adapters/cursor-cloud/src/server/execute.test.ts
index b57f8207814..156ed5d9607 100644
--- a/packages/adapters/cursor-cloud/src/server/execute.test.ts
+++ b/packages/adapters/cursor-cloud/src/server/execute.test.ts
@@ -1,3 +1,4 @@
+import { generateKeyPairSync, sign, verify } from "node:crypto";
 import { beforeEach, describe, expect, it, vi } from "vitest";
 import type { AdapterExecutionContext } from "@paperclipai/adapter-utils";
 import { createPromptContextFixture } from "@paperclipai/adapter-utils/test-fixtures/prompt-context";
@@ -266,6 +267,39 @@ describe("cursor_cloud execute", () => {
     );
   });
 
+  it("delivers the assigned identity to the managed cloud environment without exposing it in prompts or metadata", async () => {
+    const keys = generateKeyPairSync("ed25519");
+    const identity = {
+      keyId: "sha256:assigned-identity",
+      publicKeyPem: keys.publicKey.export({ type: "spki", format: "pem" }).toString(),
+      privateKeyPem: keys.privateKey.export({ type: "pkcs8", format: "pem" }).toString(),
+    };
+    const sdkAgent = createMockSdkAgent();
+    createMock.mockResolvedValue(sdkAgent);
+    const ctx = createContext({ agentIdentity: identity });
+    ctx.config.env = {
+      CURSOR_API_KEY: "cursor-secret",
+      PAPERCLIP_AGENT_KEY_ID: "configured-override",
+      PAPERCLIP_AGENT_PRIVATE_KEY: "configured-override",
+      paperclip_agent_private_key: "configured-override",
+    };
+
+    await execute(ctx);
+
+    const env = createMock.mock.calls[0]?.[0]?.cloud?.envVars;
+    expect(env).toMatchObject({
+      PAPERCLIP_AGENT_KEY_ID: identity.keyId,
+      PAPERCLIP_AGENT_PUBLIC_KEY: identity.publicKeyPem,
+      PAPERCLIP_AGENT_PRIVATE_KEY: identity.privateKeyPem,
+    });
+    expect(env).not.toHaveProperty("paperclip_agent_private_key");
+    const challenge = Buffer.from("managed cloud identity");
+    expect(verify(null, challenge, identity.publicKeyPem,
+      sign(null, challenge, env.PAPERCLIP_AGENT_PRIVATE_KEY))).toBe(true);
+    const privateBody = identity.privateKeyPem.split("\n")[1];
+    expect(JSON.stringify([ctx.meta, ctx.logs, sdkAgent.send.mock.calls])).not.toContain(privateBody);
+  });
+
   it("omits empty environment values while preserving nonempty values exactly", async () => {
     createMock.mockResolvedValue(createMockSdkAgent());
     const ctx = createContext();
diff --git a/packages/adapters/cursor-cloud/src/server/execute.ts b/packages/adapters/cursor-cloud/src/server/execute.ts
index c4335fb71b8..3a14ba1a20b 100644
--- a/packages/adapters/cursor-cloud/src/server/execute.ts
+++ b/packages/adapters/cursor-cloud/src/server/execute.ts
@@ -17,6 +17,7 @@ import {
   asString,
   buildPaperclipEnv,
   buildRuntimeToolsEnv,
+  isForbiddenConfigEnvKey,
   joinPromptSections,
   parseObject,
   readPaperclipIssueWorkModeFromContext,
@@ -59,6 +60,7 @@ function asStringEnvMap(value: unknown): Record<string, string> {
   const parsed = parseObject(value);
   const env: Record<string, string> = {};
   for (const [key, entry] of Object.entries(parsed)) {
+    if (isForbiddenConfigEnvKey(key)) continue;
     if (typeof entry === "string") {
       env[key] = entry;
     } else if (typeof entry === "object" && entry !== null && !Array.isArray(entry)) {
@@ -108,6 +110,8 @@ function buildWakeEnv(ctx: AdapterExecutionContext, configEnv: Record<string, st
   const { runId, agent, context, authToken } = ctx;
   const env: Record<string, string> = {
     ...configEnv,
+    // The selected managed cloud host is trusted with this persistent identity,
+    // just like a managed local host (see doc/AGENT-IDENTITY.md).
     ...buildPaperclipEnv(agent, ctx.agentIdentity),
     ...buildRuntimeToolsEnv(ctx.runtimeTools),
     PAPERCLIP_RUN_ID: runId,