7 Bitcoin and Crypto Custodians Facilitating Institutional Digital Asset Adoption
Crypto custodians are one of the important pieces to the puzzle for mass institutional adoption of bitcoin (BTC) and other cryptoassets. They enable investors to store their digital assets with regulated third-party custody providers.
Read on to discover a list of some of the leading 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 typically 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 leading crypto custody providers 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 crypto custody, trading, financing, staking, and governance services.
As the first federally chartered crypto bank in the United States, Anchorage is forming a bridge between the more traditional banking system and the emerging digital asset space.
For their crypto custody customers, an added layer of security comes through insurance that protects the digital assets all through their custodial life cycle.
Heavily-backed crypto platform Bakkt also offers crypto custodian services protected by insurance.
Bakkt protects its customers' assets through an insurance cover to the tune of USD 125,000,000. This is an additional security measure of the Bakkt Warehouse, which deploys online storage and air-gapped offline digital asset storage. The company regularly rebalances between warm and cold storage to reduce risks associated with warm storage.
Bakkt also has a mobile app that allows users to spend BTC on everyday goods and services. The firm also partnered with Mastercard to increase the access and usage of cryptocurrencies in the financial space, which holds great potential in bringing in 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 their customers having access to cold storage systems and configurable multi-user accounts.
Additionally, BitGo carries out 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 clients within the New York regulatory charter.
Coinbase is one of the biggest crypto exchanges in the world and this San Francisco-based company also operates a crypto custody service called Coinbase Custody.
In order for Coinbase Custody to be independent of Coinbase, it operates as a standalone, independently-capitalized business. It’s recognized as a fiduciary under the New York State Banking Law. The company segregates and holds its clients’ digital assets and boasts military-grade cold wallets that offer a high level of protection for crypto investors. Further, the company has an insurance cover and undergoes regular financial and security auditing by external firms.
Fidelity Digital Assets
Fidelity Digital Assets (FDAS) was started as a part of Fidelity Investment’s Blockchain Incubator. Fidelity Investments is known to be one of the world’s largest financial services providers.
As a crypto custodian, FDAS started operating in 2018 to offer custody and trade execution services. Their main target customers include institutions, hedge funds, market intermediaries, and family offices.
FDAS has a New York Trust Charter and has been granted registration with the UK Financial Conduct Authority to provide digital asset custody and trade execution business in the UK.
Gemini Custody is a New York Trust Company founded in 2019 by crypto exchange Gemini. It’s a Qualified Custodian chartered by the New York State Department of Financial Services.
For their customers’ digital assets’ security, Gemini secured USD 200m in cold storage insurance coverage, something they say is the largest insurance coverage purchased by any crypto custodian in the world. Their customer’s crypto is segregated using unique cryptocurrency addresses which are independently verifiable and auditable.
Kingdom Trust Custodial Services was founded in 2017 and offers custodial options and solutions for individual and institutional clients. The company has a long history as a reputable financial custodian and is regulated by the South Dakota Banking Division.
Kingdom Trust offers three ways of managing and securing customers’ crypto: customers holding their own private keys using a digital tool provided by the company, having their crypto and digital assets in cold storage through a partnership with Fidelity Digital Assets, and lending or staking digital assets via Kingdom custodial accounts.
Qualified custodians that provide digital asset custody services play an integral role in the institutionalization of the global crypto markets. The more comfortable institutional investors feel holding crypto, the more likely they will invest more in this new asset class.
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