Custodian is a third-party provider of storage and security services for cryptocurrencies. The solutions generally consist of a combination of hot storage, or crypto custody with connection to the Internet, and cold storage, or crypto custody that is disconnected from the Internet. Custodians harness their market expertise to minimize the risk of fraud, theft, or loss to those assets.
The cryptocurrency custody environment continues to evolve as there is growing demand from all market participants worldwide, from individual investors to some of the largest institutional investors, for asset security and ease of transactions. When it comes to crypto adoption among businesses, it is up to a qualified custodian to help them secure their digital assets.
Here are some key benefits of third-party custody:
- Expertise. Investors rely on the crypto expertise that the custodian organization represents.
- Reducing risk and complexity. Potential investors in digital assets may be distracted by the seemingly complex nature of the market. From an investor's point of view, the concept of holding assets with a custodian is familiar to them and is similar to the traditional financial system.
- Increased security. The online nature of digital assets presents many security risks, not least a vulnerability to hackers. However, licensed custodians provide the necessary resources, regulated solutions, including insurance options to mitigate risks.
- Compliance. In the light of regulation uncertainty, compliance with standards such as the CryptoCurrency Security Standard (CCSS), KYC/AML, and others is a must for investing in crypto.
However, there are a few considerations to keep in mind about digital asset custody solutions:
- Custodians offer a limited set of digital currencies that they are willing to hold.
- The general list of services and their quality may differ from one custodian to another.
- There is often a delay of up to several days when trading assets held by the custodian.
Choose Your Crypto Custodian
If you have found a crypto custodian useful for your business or personal needs, now is the time to find the right partner. The Finscanner team has prepared a set of excellent major custodians for you to start with. At the same time, we will not follow any particular hierarchical order but only mention the most popular ones at the Finscanner marketplace. As an investor or project owner, you should choose the one that best suits your specific requirements.
Gemini — is the US-licensed cryptocurrency exchange launched in 2015 and regulated by the New York State Department of Financial Services. It provides services for individual investors and investments funds. Gemini has SOC-I and SOC-II compliance and uses military-grade storage facilities for funds held in its custody.
SEBA Bank — is an innovation bank founded in 2017 and headquartered in Zug, Switzerland. In 2021 it received a license for digital asset funds from the Swiss Financial Market Authority (FINMA) to act as a custodian bank for Swiss collective investment schemes. Its services include transaction banking in fiat and crypto, military-grade secure storage of crypto assets, trading and liquidity management, asset and investment management.
Coinbase Custody — is a reputable New York-based cryptocurrency exchange that launched its business in 2012. Coinbase Custody offers clients access to the secure, institutional-grade offline storage solution.