Best Crypto Custody Providers in 2021 - Comparison
Faced with challenges to proper storage of funds, the blockchain-cryptocurrency community is witnessing the rise of some of the best crypto custody providers. Often, hardware wallets holding cryptocurrencies have been lost or corrupted, resulting in the irretrievable loss of funds. Similarly, exchange platforms have been hacked, and their funds stolen.
Ever since Bitcoin’s release in 2008, blockchain and cryptocurrency has emerged as one of the fastest proliferating industries of our times. Every day, several projects with immense potential are being launched around the world. In turn, there’s an exponential rise in the value generated and locked in the sector. Understandably, such immense value needs to be secured, and in this regard, blockchain’s inherent security features might not be enough. Against this backdrop, we discuss top cryptocurrency custody solutions for 2021.
What is a cryptocurrency custody service?
For proper understanding, let’s begin with a definition of custodian services:
In simple terms, a cryptocurrency custody service is a secure, off-chain storage solution for cryptocurrencies. Although accessible to individual users, these services are usually designed for institutional investors who store large amounts of funds.
To ensure optimal security, the best crypto custodians often leverage a combination of hot and cold wallets. By definition, hot wallets are online wallets and are thus prone to hacks (hot storage). Yet, they are also more seamless. Cold wallets, on the other hand, store funds offline, which enhances the security but hampers accessibility to some extent (cold storage).
Why is crypto custody important?
Businesses transact and hold cryptocurrencies worth millions of dollars, which demand professional and specialized storage solutions. Furthermore, in the United States, investments over 150K USD are legally bound to employ certified cryptocurrency custody providers. Therefore, alongside the growth in the value invested in the blockchain-cryptocurrency sector, the demand and need for reliable custody service providers is on the rise.
Top cryptocurrency custody providers
Having understood the definition and significance of custody services, let us now discuss some of the best in class crypto custodian projects. In doing so, we shall not follow any particular hierarchical order. As a user or project owner, you must choose one that is the best-suited to your specific requirements.
In the domain of cryptocurrency custody, BitGo is arguably the “gold standard”, duly regulated under the division of banking in South Dakota. Primarily a cold-wallet custody provider, the platform offers battle-tested, peer-reviewed, and segregated accounts for extreme security. Regular third-party audits also ensure the platform’s updated relevance in terms of security and performance. Furthermore, cryptocurrency assets in BitGo’s custody are covered by substantial insurance of 100 million USD.
- $1 million USD minimum account value.
- Supports more than 300 coins and crypto tokens.
- Ability to purchase "Excess Specie coverage" ensuring an additional layer of protection BitGo’s crypto wallet platform empowers users in leveraging the perfect security-accessibility balance, through the company’s cold, warm, and hot wallet solutions.
- BitGo’s qualified custody solution is designed for institutional needs, offering security, and insurance for digital assets.
- Allows users to integrate their existing cryptocurrency wallets and/or payment services with BitGo’s wide-ranging product offerings.
Formerly known as Vo1t, the project got its present name after the takeover by the Genesis Group, in the latter’s drive towards growing its digital assets servicing repertoire. At the time of writing, Genesis Custody is one of the best cold wallet crypto custodian service providers.
Among other aspects, the project features multiple layers of military-grade encryption, while storing the private key in a geographically distributed manner. In doing so, they leverage several decommissioned nuclear bunkers for high-grade private security.
- Leverages innovations in Multi-Party Computation (MPC) for hardware-based, cold custody solutions, thus ensuring optimum security.
- Enables streamlined digital asset trading for professional traders with rapid transaction processing and same-day settlements.
- Additional contingency for digital asset holders, insuring custodied funds with A-rated S&P solutions.
As a cryptocurrency custody provider focusing on institutional businesses, Digivault works with a thorough realization of the obstacles to cryptocurrency’s mass adoption. Above all, is the security of crypto exchanges and private crypto wallets.
On the contrary, Digivault’s crypto custodian solution is secure by design, combining both hot and cold storage solutions. In turn, this provides end-users with a perfect balance of security and liquidity.
- Digivault’s cold wallet, Kelvin, is stored in the highly secure vaults of Malca-Amit — an industry-leading vault service provider — and offers “ultra-secure, offline, deep storage of digital assets.
- Kelvin assures multi-layer security, protecting users’ private keys with ‘Key Sharding’, while ‘air-gapped transactions’ minimize the risks of hacks and breaches.
- Helios — Digivault’s warm crypto wallet offering — comes with a secure and seamless API for optimum interoperability with Kelvin for a unified end-user experience.
- Helios adopts a multi-layer security architecture, leveraging distributed physical storage of private key, alongside a design that requires multiple sites to cooperate for any transaction.
Fireblocks is another distinguished crypto custodian platform, delivering an enterprise-grade infrastructure for handling digital assets. Enabling the secure transfer of crypto assets, it caters to exchanges, neo-banks, trading desks, and hedge funds.
Fireblocks’ patent-pending SGX and MPC technology are helping its partner investors to scale their digital asset signature and reach. To date, they have transferred over nine billion dollars of digital assets globally. Moreover, their insurance policy covers the assets during transit and during storage.
- Promises an 8x transaction speed and the option to choose between cold, warm, and hot wallets.
- Enables upto 90% reductions in transaction fee, as compared to legacy multisig ecosystems, thereby minimizing the scaling costs for its customers’ businesses.
- Wallet-as-a-service model is easy to use and easy-to-implement, scalable, and flexible custody solutions for institutional players.
Building on its reputation as a cryptocurrency exchange, the New York-based Coinbase has launched its custody offering in 2012. To ensure the best-possible security for crypto digital currency, Coinbase leverages its access to military-grade cold wallets.
As an industry-leading cryptocurrency custody provider, Coinbase subjects its platform to regular, standardized auditing procedures. Furthermore, Coinbase users also have the option of staking funds directly from their offline wallets.
- One of the most reputed players in the industry, a market leader.
- Designed for institutions, offering a robust segregated cold storage ecosystem with military-grade security and optimum accessibility through dedicated on-chain addresses.
- State-of-the-art insurance policies to cover almost every foreseeable aspect for superior contingency and compensation in the event of a loss.
- Additional benefit of participating in the value-based crypto networks, empowering users with a seamless method indulging in staking and governance activities.
Licensed to provide qualified custodian services in New York, Gemini is the first crypto custodian having SOC-I and SOC-II compliance. Apart from its compliance-backed reliability, Gemini uses military-grade storage facilities for funds held in its custody. Promising the highest level of security, Gemini’s services are designed while keeping in mind the demands of institutional-grade investors. However, the platform also caters to individuals.
- Compliant with New York State Trust Company standards - infusing an added degree of reliability.
- Massive $200 million fund coverage, which is arguably the biggest investment cap in the entire crypto custody industry.
- Represents a robust secondary market for assets held by the company’s custodian wallets, thus providing high liquidity for the users.
- Low barriers to entry — no minimum balance threshold, dynamic pricing options, and no-cost setup.
From retirement funds to precious metals, Kingdom Trust has a long history of being a reputable financial custodian. Presently, the platform has diversified its scope, thus bringing qualified custodian services under its ambit.
Catering equally to institutional investors, exchanges, and individuals, Kingdom Trust is among the most highly secure and qualified cryptocurrency custody solutions. By helping its clientele with risk minimization, the platform helps with transparency, compliance, and accountability, especially in the case of institutions.
- Supports over 100,000 retirement accounts while holding custody of over 20,000 forms of digital assets, including BTC, physical gold, and so on.
- Probably one of the easiest-to-use solutions with a simple onboarding procedure.
- Offers a competitive fee schedule and well-informed investment decisions through intuitive insights and analytics.
The importance of cryptocurrencies as an asset class is steadily rising. As traditional investors are increasingly participating in the space, there’s a growing demand for reliable and professional security services. Secured storage of funds in crypto wallet is among the greatest concerns in this regard, thus necessitating robust crypto custodian services.
In turn, top crypto custodians are becoming extremely relevant for the community holistic development. Speaking of the best cryptocurrency custody providers, one must mention the likes of Genesis, Coinbase, and so on. Having said that, each custody service provider has its specific offerings, which users must weigh in relation to their requirements. For instance, the degree of trust offered by FireBlocks or Kingdom Trust is often highly necessary for small and medium investors. On the other hand, for example Genesis is more suited to institutional investors.