Large amounts of tokens are held in separate storage and security systems called cryptocurrency custody solutions. Custody solutions are one of the newest things to come out of the cryptocurrency ecosystem. Third-party services are used to securely store the crypto. They were thought to be a sign that institutional capital was coming into the industry. In this article we’ll show you the best crypto custody solutions and explain how it works.
Top 5 Crypto Custody Providers 2022
Gemini
Gemini is a straightforward, stylish, and safe platform for creating your cryptocurrency portfolio. Never before have buying, trading, and storing cryptocurrencies been so easy. Gemini features all the resources you need to purchase, sell, or store your cryptocurrency, whether you’re an expert trader or just starting started. Gemini is a licensed New York trust firm that is subject to the cybersecurity assessments carried out by the New York Department of Financial Services as well as routine bank examinations.
Bakkt
You can manage your digital assets with the help of Bakkt’s digital wallet. Track, use, and send digital assets with Bakkt. As well as trade, convert, and pay using your digital assets. The primary owner of Bakkt®, which runs more than a dozen of the most famous exchanges in the world, including the New York Stock Exchange, is Intercontinental Exchange. Your digital assets are protected by Bakkt.
Casa
The safest method of keeping your Bitcoin. The best strategy to invest in the money that is most robust in the globe. Your Bitcoin is safe with Casa thanks to its well-proven security, both for you and your loved ones. You always have the upper hand. Casa offers you the resources to accomplish it, but you keep the keys to your Bitcoin. On Casa, you can rely. When you need expert assistance, Casa always available to you while protecting the privacy of your data. The safest, simplest approach to begin using multisig. Donate superpowers to your hardware wallet. The best service and security that Bitcoin has to offer.
Venly
The services offered by Venly Wallet make it simple for you to sign up new users. Enjoy NFT tools and NFT marketplace to the fullest. The widest range of blockchain layers are supported by Venly’s product line. Both fungible (NFTs) and non-fungible tokens are the subject of project’s attention. Venly is a solid partner for expanding your blockchain project because to our robust wallet, minting, and market APIs.
Fidelity Digital Assets
According to Fidelity Investments, all kinds of assets will eventually be issued natively on blockchains or represented in tokenized form. A full-service, enterprise-grade platform for protecting, trading, and supporting investments in digital assets is the foundation of the whole process. To store, trade, and support their investments in digital assets, institutions need enterprise-grade services that are highly accessible, trustworthy, and reliable. For stocks, bonds, and other asset classes, these capabilities are generally available, but not for this newly developing digital asset class. With more than $7 trillion in client assets under management and more than 1.3 million trades handled every day, Fidelity Investments is one of the biggest and most varied financial services companies in the world.
What Is A Crypto Custody Solution?
Crypto custody refers to the process of keeping your crypto assets safe from criminals. To achieve this, the services of a third party are used to securely store the crypto. Custodians have been around since the 60s, they form a core pillar of the traditional financial system.
Unlike the fiat world, crypto custody is a bit different. Crypto custodians do not store any physical assets. Instead, what they guard is a private key associated with a crypto wallet. This key is what grants anyone access to crypto-assets
Crypto custody services are essential for the widespread adoption of crypto. To date, most institutional investors stay out of the crypto world due to the lack of security. Institutions that hand large quantities of cash are required by the law to have a safekeeping partner that can secure the funds of their clients.
As interest in crypto by institutional investors grows, various crypto custody solutions have emerged in response to rising demand. For instance, between January 2019 and January 2022, the crypto assets under crypto safekeeping management are estimated to have grown from $32 billion to $223 billion.
How Do Crypto Custody Solutions Work
When using a third-party crypto custody solution, the third party will manage their clients’ crypto assets. Third parties have to acquire a crypto custody license in line with the law. These regulated custodians will hold private keys for their clients to ensure no one can access them. When holding crypto-assets with a safekeeping provider, clients have to pass AML and KYC requirements. The custodians also conduct basic checks to ensure the assets were acquired legally.
The main custodian types are:
All centralized exchanges maintain custody of crypto assets for their clients. When holding crypto assets at a centralized exchange, you do not hold the private key. It is in the hands of the exchange, which means they hold your assets.
- Digital Asset Managers
Digital asset managers focus on managing crypto as an asset class. These managers are regulated under the law and have licenses to offer crypto custody solutions. Some examples of native crypto custodians are Paxos, Anchorage, and NYDIG.
- Custodial Banks
In the US, the Comptroller of the Currency (OCC) changed its policy to allow all US banks to offer crypto custody solutions. As a result, some banks in the US such as Citibank, and BNY Mellon, offer crypto safekeeping solutions.
Some of the biggest third-party crypto custody solutions such as Bakkt, BitGo, and Fidelity, only offer their services to institutional investors. Others require a high minimum balance to access their services. For instance, Coinbase Trust has a minimum requirement of $500,000.
Cost of Crypto Custodian Services
Most of them charge an annual fee, which is often less than 1% of the total value of the assets. For instance, Gemini charges a 0.4% fee for its safekeeping services. There is also a setup fee to open a custodial account. Finally, you will be charged a withdrawal fee when you move funds from the custody account.
Summary
In general, crypto custody solutions are a great method to securely store crypto. One benefit of these solutions is that their services are insured. In case of loss, or theft, you can be assured of recovering your assets’ value.
