Crypto custodians are one of the important pieces of the puzzle for the mass institutional adoption of bitcoin (BTC) and other cryptoassets. They allow investors to store their digital assets with regulated third-party custody providers.
Read on to discover a list of some of the top crypto custody providers.
What is a Crypto Custodian?
A crypto custodian is a financial services company that stores digital assets on behalf of investors.
Institutional investors are generally required to store their securities and assets with qualified custodians, which is why the introduction of crypto custody providers has been a game-changer for the institutionalization of bitcoin.
Professional and institutional investors generally prefer not to manage their own private keys to reduce the risk of loss of funds due to theft, operational errors or technical mishaps.
Popular Crypto Custody Providers
Now let’s take a look at several top crypto custody providers that you could use to store your digital assets.
Anchorage is a full-service financial platform and infrastructure provider for the digital asset space. Founded in 2017, Anchorage provides institutions with access to a range of crypto services, including custodial, trading, funding, staking, and governance services.
As the first federally chartered crypto bank in the United States, Anchorage forms a bridge between the more traditional banking system and the emerging digital asset space.
For their crypto custodial customers, an additional layer of security comes through insurance that protects digital assets throughout their custodial lifecycle.
The heavily backed crypto platform Bakkt also offers insurance-protected crypto custodian services.
Bakkt protects its clients’ assets with insurance coverage up to USD 125,000,000. This is an additional security measure from Bakkt Warehouse, which deploys online storage and offline digital asset storage in air-gap mode. The company regularly rebalances hot and cold storage to reduce the risks associated with hot storage.
Bakkt also has a mobile app that allows users to spend BTC on everyday goods and services. The company has also partnered with MasterCard to increase access to and use of cryptocurrencies in the financial space, which holds great potential to attract more users to the crypto world.
BitGo, founded in 2013, is a regulated trust company that acts as a cryptocurrency custodian for individuals and institutions. The company manages up to 100 digital currencies and tokens as a certified custodian, with its customers having access to cold storage systems and configurable multi-user accounts.
Additionally, BitGo performs regular audits by third-party auditors.
In March 2021, BitGo received the NY Trust Charter from the New York State Department of Financial Services, which allows them to serve customers under the New York regulatory charter.
Coinbase is one of the largest crypto exchanges in the world, and this San Francisco-based company also operates a crypto custody service called Coinbase Custody.
For Coinbase Custody to be independent from Coinbase, it operates as a stand-alone, independently owned company. She is qualified as a fiduciary under New York State banking law. The company separates and holds its clients’ digital assets and offers military-grade cold wallets that provide a high level of protection for crypto investors. In addition, the company has insurance coverage and is subject to regular financial and security audits by external firms.
Loyalty digital assets
Fidelity Digital Assets (FDAS) was launched as part of Loyalty investmentThe Blockchain Incubator. Fidelity Investments is known to be one of the largest financial services providers in the world.
As a crypto custodian, FDAS started operating in 2018 to offer custody and trade execution services. Their main target clients are institutions, hedge funds, market intermediaries and family offices.
The FDAS is chartered by the New York Trust and has been registered with the UK Financial Conduct Authority to provide digital asset custody and transaction execution business in the UK.
Gemini Custody is a New York trust company founded in 2019 by crypto exchange Gemini. It is a qualified custodian licensed by the New York State Department of Financial Services.
For the safety of their customers’ digital assets, Gemini secured $200 million in cold storage insurance coverage, which they claim is the largest insurance coverage carried by any crypto custodian in the world. Their client’s crypto is segregated using unique cryptocurrency addresses that are independently verifiable and auditable.
Kingdom Trust Custodial Services was founded in 2017 and provides custody options and solutions for individual and institutional clients. The company has a long history as a reputable financial depository and is regulated by the South Dakota Banking Division.
Kingdom Trust offers three ways to manage and secure customer cryptography: customers holding their own private keys using a company-provided digital tool, having their crypto and digital assets in cold storage through a partnership with Fidelity Digital Assets, and lending or staking active digital assets through Kingdom custody accounts.
Qualified custodians who provide custodial services for digital assets play a vital role in institutionalizing global crypto markets. The more institutional investors feel comfortable holding crypto, the more likely they are to invest more in this new asset class.
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