Crypto Custody Providers for Institutions February 2023

  • January 13, 2023
  • 3 Min Read

Key Takeaways

  • The storage and safekeeping of your crypto assets are known as crypto “custody.”
  • Third-party custody comes at a cost and is usually reserved for institutional investors, but companies like Gemini provide institutional-grade custody to retail traders.
  • Self-custody means that you are responsible for keeping your assets safe and secure, while third-party custody means that a licensed institution keeps your assets safe on your behalf.

The secure storage and protection of cryptocurrencies like Bitcoin and Ethereum, known as "custody," is a critical aspect of cryptocurrency ownership. Cryptocurrencies are typically stored in digital wallets, and certain security measures can be taken to ensure that the credentials for these wallets, known as “seed phrases,” are kept secure.

For investors who are well-versed in blockchain technology, or those looking to store smaller sums, self-custody is a free option available to everyone. For investors looking to store large amounts of crypto, third-party custody services provide institutional-grade security that ensures your assets are safe and sound.

Below we explore the top solutions for crypto custody.

3 Best Crypto Custody Providers

Best ForFeesAvailabilitySupported AssetsInsurance Fund
Gemini CustodyRetail tradersNo setup fees, pricing varies based on needs Retail and institutional tradersBTC, ETH, SOL, + more$200 million in custody insurance coverage
CasaHybrid of self-custody and third party custodyStarts at $120/yearRetail and institutional tradersJust BTC for now, ETH coming soonNone
BitGoInstitutional tradersPrice varies by needs of institutional clientInstitutional traders onlyBTC, ETH, SOL, + more$250 million in insurance

The vast majority of third-party custody providers reserve their services for institutional traders, funds, and crypto exchanges. Certain providers such as Gemini Custody and Casa, however, make their services available to everyday retail traders.

This means they don’t have large account minimum requirements, and they offer competitive pricing that makes their services accessible to most traders. For institutional traders, custodians like BitGo provide white-glove custody service.

1. Gemini Custody

Gemini Custody

Crypto exchange Gemini provides custody services for retail and institutional clients. Unlike the custody services of other crypto exchanges such as Coinbase, Gemini Custody provides a free setup and has no minimum deposit requirements. The company is touted as one of the most regulated exchanges in crypto, so your assets are safe in their vaults.

While not all cryptocurrencies are supported by third-party custody providers like Gemini, the company offers a wide range of supported assets, listed on their website. In addition to personalized account management and 24/7 customer service, assets held in Gemini Custody accounts are backed by $200 million in insurance protection.

Website: Gemini

2. Casa

Casa custody

Casa is a blend between self-storage and third-party custody. The service uses a “multi-signature” or “multisig” model for storing your crypto wherein you are provided with a software mobile key, a hardware key device, and a Casa recovery key. In order to spend your crypto, you only need to have access to two of the three keys. This means that if you lose one of your keys, you can still recover your funds by contacting Casa.

Casa's multisig security system is offered through an annual subscription starting at $120. Higher tier subscriptions are also available, offering increased security through the use of five or six multisig devices rather than three, as well as premium customer service and 24/7 emergency support. The Casa wallet currently only supports Bitcoin, but they are adding support for Ethereum in the near future.

Website: Casa

3. BitGo

BitGo crypto custody

BitGo is one of the leading providers of institutional crypto custody services. Exchanges such as eToro and service providers like BitcoinIRA entrust their client funds to BitGo as their qualified custodian. The company provides a range of products that include hot wallets, cold wallets, self-custody hardware wallets, and even NFT wallets.

BitGo’s status as a qualified custodian means that they meet stringent regulatory requirements and undergo regular audits. They also maintain a $250 million insurance policy for client assets. BitGo’s services are reserved for family offices, crypto exchanges, and other types of institutional investors, meaning that you won’t be able to take advantage of their services if you’re a retail trader.

Website: BitGo

Self-Custody vs. Third-Party Custody

Best ForSecurityFeeComplexityAssets SupportedMinimum Assets Required
Self CustodyCasual crypto traders with small balancesLower — entirely depends on you keeping your assets safeFree for software wallets, small fee for hardware walletsComplex — storing your seed phrase safely and ensuring your wallet is not compromised can take a lot of workMost wallets support most crypto assets None — you can get started with $0 in crypto
Third Party CustodyStoring large sums of crypto or digital assetsHigh — certified custodians use state-of-the-art security to keep your assets safeComes at a cost — fees vary case-by-caseSimple — the custodian takes care of all the complexity on your behalfUsually provides storage services only for the most popular cryptocurrenciesUsually has minimum balance requirements

When it comes to custody, there are two options: self-custody or third-party custody. Self-custody refers to using your own crypto wallet provider and managing the safekeeping of your own wallet keys. Third-party custody, on the other hand, involves using an institutional provider to store your crypto through their own crypto wallets, whose security is ensured by the institution.

Quick Sip

Self-custody wallets generate a “seed phrase” which is used to log in and access the wallet’s funds. As long as you can keep your seed phrase secure and avoid compromised apps, self-custody is fully secure.

  • Read More About Self-Custody vs. Third-Party

    Expand to learn more

    Each crypto wallet has a security key, called a “seed phrase” that is used to access the funds in the wallet. The seed phrase works similarly to a password for a traditional account on a website.

    Unlike traditional passwords, however, there is no “reset” option for your seed phrase. This means that if you lose your seed phrase, you will not be able to log in to your wallet, and there is no one who can recover your seed phrase for you — not even the wallet provider. On the flipside, unless you have enabled the use of a secondary authentication method, anyone who knows your seed phrase can log in to your wallet.

    Most crypto wallets are software apps, accessed via wallet applications such as MetaMask. There are, however, physical crypto wallets as well. These wallets come in the form of a USB device which, when plugged into a computer, authenticates the credentials needed to access the wallet. In the case of physical wallets (referred to as “cold storage” wallets), your funds cannot be stolen easily.

    However, they pose another problem: You must guarantee the physical safety of the device at all times. In theory, anyone who gets ahold of the physical USB device can access your wallet’s funds.

    In short, when it comes to self-custody, the safety of your crypto funds depends on how well you can safeguard your seed phrase or the physical USB wallet. This is easily done when your wallet does not have a large sum in it, but as your crypto holdings grow, you will likely be exposed to phishing attempts to reveal your seed phrase, sign fraudulent transactions with your keys (thereby giving compromised apps access to your wallet), or other attempts to hijack your funds.

Best self-custody options:

Pros

  • Get 24/7 access to your funds without having to verify your identity or share any of your credentials with anyone else.
  • Self-custody setup is easy and free.
  • Self-custody wallets generally support more types of crypto assets compared to third-party custodians.

Cons

  • You are solely responsible for your seed phrase and likely will not be able to recover funds if you lose access to your wallet.
  • Funds are not insured against hacks or losses.
  • Self-custody setup can be technically challenging when compared to the one-click setups of third-party custody.

Quick Sip

For large sums of money and valuable digital assets, or simply for peace of mind, many traders opt for third-party crypto custody. Licensed custodians keep your crypto safe using state-of-the-art security, and many even provide insurance funds in case your crypto does get compromised.

If you’re looking to safeguard your crypto without having to worry about maintaining the security of your wallet, you can turn to third-party custodians. These custodians are licensed financial institutions that maintain a high level of security for all of their stored assets.

There are several types of third-party crypto custodians, depending on your needs.

  • Crypto Exchanges: Crypto exchanges such as Coinbase, Gemini, and Binance store client funds in wallets that guarantee some level of security. These wallets are either the exchange’s own wallets or those of an institutional partner.
  • Custodian Banks: Traditional custodian banks, such as BNY Mellon and JPMorgan Chase, which provide custody services for traditional financial assets, can now act as crypto custodians. These institutions were cleared to provide crypto custody services in 2020 thanks to an updated policy from the Office of the Comptroller of the Currency (OCC).
  • Digital Asset Managers: Firms dedicated to the custody of digital assets like cryptocurrencies have emerged over the last few years. Companies like NYDIG provide third-party custody services for cryptocurrency.

While third-party custody is an easy and attractive option, it does come at a cost. Many of these custodians require some minimum amount of crypto in order to provide their services. Additionally, custodians charge fees on the deposited crypto and may also require you to pay withdrawal and storage fees.

All custodian services are also required to perform Know-Your-Customer (KYC) and Anti-Money Laundering (AML) checks on all clients — a process that takes time and makes the setup more complicated than self-custody.

Pros

  • Your funds are stored in institutional-grade secure vaults.
  • Custodians often have an insurance policy that protects your funds even in the case of a hack.
  • Many custodians offer simple one-click setups that require no technical expertise on your part.

Cons

  • Third-party custody comes at a premium since many of these providers charge significant fees to store your crypto and require a minimum crypto deposit.
  • Each custody provider has a list of crypto assets that they support and, while most providers support major assets like Bitcoin and Ethereum, less popular coins may not be available for custody by all third-party custodians.
  • While it’s rare, these large institutions can sometimes be subject to hacks and insolvencies.

Frequently Asked Questions

  • What is crypto custody?

    Expand to learn more

    Crypto custody refers to the safekeeping and storage of cryptocurrencies such as Bitcoin and Ethereum.

    Crypto can be stored in self-managed crypto wallets or delegated to third-party custodians. Self-custody is often cheaper and more accessible, but if you lose the private keys to your wallet, you run the risk of losing access to your crypto. Third-party custody comes at a fee but guarantees the security of your crypto.

  • Why is crypto custody important?

    Expand to learn more

    Everything in crypto safety comes down to the wallet your crypto is stored in. If you lose the keys to that wallet, there’s a good chance that you won’t be able to access your funds.

    Deciding between self-custody and third-party custody is a choice between taking on the responsibility of safeguarding your own keys or entrusting the security of your funds to professionals.

  • Who are qualified crypto custodians?

    Expand to learn more

    A qualified custodian is a licensed company that securely stores money, assets, and digital goods like cryptocurrencies on behalf of clients.

    These institutions are heavily regulated and operate under the supervision of government agencies like the SEC. This ensures compliance and helps clients have faith that their assets are safe.

  • How much does crypto custody cost?

    Expand to learn more

    Self-custody is generally free — you simply download a crypto wallet like MetaMask and write down your seed phrase. Self-custody in the form of hardware wallets comes at a price, but it provides better security.

    Third-party custody options also come at a price. Multi-signature solutions like Casa start at $120/month, while services from qualified custodians like Gemini are priced based on the individual needs of traders.

Contributors

  • Avatar of George Hristov

    George is a tech writer interested in web3 startups and communities. In the dynamic world of crypto, he stays plugged in to the day-to-day headlines, deep dives, and industry commentary.

  • Avatar of Gary Anglebrandt

    Gary Anglebrandt is a US-based editor, copywriter, and communications consultant with a background in business and international news. Beyond the US, he has worked from Seoul and Beijing, and continues to work with professionals based around the globe.