What is a crypto custodian? Crypto custodians are independent storage institutions or third party security service providers that store crypto and digital assets on behalf of institutional and professional investors. Since digital assets have a high potential for loss or theft, crypto custodian services provide a secure storage facility in exchange for a small fee.
Nomura Crypto Custody: In 2018, Japanese bank Nomura became the first bank to offer crypto custody services.
How Does Crypto Custody Work?
Crypto investors apply at crypto custodians for storage of their crypto assets. Registration process differs from crypto custodian to crypto custodian. But they all have to go through KYC and Anti Money Laundering checks. After qualifying, they will then release their crypto assets to cold storage wallets of the crypto custodians.
Why the Cryptocurrency Ecosystem Needs Custody Solutions
Crypto custody providers are important to every cryptocurrency investor. Reasons for the existence of crypto asset storage providers include the following:
- To safeguard or protect crypto assets. There has been unending theft of crypto assets. Consequently, custodians have come out to offer security of these assets.
For regulation purposes. Previously, many institutional investors were unable to join the digital asset markets. However, the whole process is now regulated and investors are required to hold their digital assets with qualified custodians.
Best Crypto Custodians
Despite being fairly new, the cryptocurrency custody services niche has a growing competition and there are several cryptocurrency custody solutions in the market. The following are the top crypto custodians in the market.
BitGo Crypto Custody
BitGo offers institutional crypto custodian services. It became a financial services company storing digital assets when it launched the BitGo Trust Company in 2018. The lack of transparency and stability in the crypto ecosystem prevents institutional investors from joining the niche. As such, BitGo came into the spotlight to solve this problem. BitGo uses insured crypto custody that enables clients to trade digital assets directly and anonymously.
Kingdom Trust Crypto Custody
Kingdom Trust is a crypto custody institution regulated by the South Dakota Division of Banking. It has over $12 billion assets in custody and it services family offices, investment businesses, individual investors, broker-dealers, funds of funds, advisory firms, etc. Kingdom Trust offers online account opening for the Self-Directed IRA industry.
ING Crypto custody: Dutch bank ING is working on crypto custody solutions for its clients.
Coinbase Crypto Custody
Coinbase is an insured crypto custodian under the New York State Banking Law. It operates independently of its parent company Coinbase Inc. If you want to become a Coinbase client, you must have a minimum balance of $1, 000, 000 with an implementation fee between $0 and $10, 000. Coinbase custody supports all types of digital assets.
Tangany Crypto Custody
Tangany offers cryptocurrency custodian services for institutional investors and businesses. It features a modular custody suite that allows clients to choose from a variety of products and services. These include warm wallets, multi-signature cold wallets, node infrastructure and crypto payment processing. Tangany has a wide base of clients in the EU and serves more than 65, 000 wallets.
itBit Crypto Custody
itBit is a New York State Trust Company that uses 100% cold storage. The services it offers include an OTC trading desk, a cryptocurrency exchange, and a custodial solution. itBit is subject to strict regulatory oversight by the New York State Department of Financial Services.
Onchain custodian serves high net-worth individuals, family offices, crypto exchanges, miners, funds, ICO and STO founders, asset managers, OTC brokers, etc. It supports 8 digital assets; LTC, USDT, BTC, ETH, NEO, GAS, ONT, and ONG.
Gemini Crypto Custody
Gemini crypto custody is a qualified custodian licensed by the State of New York to store digital assets. It supports over 23 different assets and offers its services to institutions and individuals. Gemini Custody enjoys a $200 million crypto custody insurance (insured by Captive Insurance Company called Nakamoto). Gemini stores all digital assets (assets for trading and those offered for custody only) on the Gemini Exchange.
HexTrust Crypto Custody
HexTrust offers its services to corporations, exchanges, brokers, and institutional investors. It is protected by bank-grade security, proven cryptographic algorithms, and standards. Since HexTrust offers on-chain segregation of assets at the account level, balances and transactions are independently auditable on their respective blockchains.
Bitcoin Suisse Vault Crypto Custody
Bitcoin Suisse custody serves corporations, financial institutions, and private investors. The Bitcoin Suisse Vault uses cold storage to hold digital assets. Customer assets are held on individual blockchain addresses making them easily accessible for trading, transfer, and for any other purpose. Bitcoin Suisse supports the storage of ETH, BTC, BCH, BSV, THETA, XTZ, EWT, XRP, LTC, BTG, TRON, and all ERC20/223.
Anchorage Crypto Custody
Anchorage crypto custody is a qualified custodian that has one of the most advanced and proven security architecture creating a safe environment for crypto use and trade. It supports a variety of digital assets.
Finoa Crypto Custody
Finoa is a crypto custody solution that serves high net-worth individuals, institutions and corporations globally. It offers custody, staking, and trading services to its clients. Finoa relies on warm storage where its clients can conduct instant withdrawals without compromising security. Finoa supports Bitcoin, Ethereum and Altcoins.
Aegis Crypto Custody
Aegis Custody provides self-custody solutions where clients can control their private keys and digital assets without relying on any third party service provider. Aegis supports BTC, ERC20, and ETH compliant tokens.
OSL Crypto Custody
OSL provides insured custody, brokerage and exchange services for digital asset holdings. OSL insures digital assets against theft, loss, damage, or destruction. OSL offers crypto protection for both cold and hot wallets using state-of-the-art encryption, private key protection, and multi-layer authentication. The OSL levels of protection are divided into 5 categories; physical defense, process defense, digital defense, slippage detection, and insurance.
Final Thoughts on Digital Asset Custody Solutions
There are many crypto asset custody services in the market today. However, it is best to know what is required for an ideal crypto custody solution before settling for a solution provider. An ideal custodial solution has a powerful and flexible policy layer, it is scalable to suit both high-value and high-volume situations, it uses Multi-Party-Computing (MPC) enhanced with hardware security, etc.