What is a Custody Solution?
A custody solution is a service that securely holds and manages digital assets on behalf of clients. For institutional investors and RWA products, qualified custody is often a regulatory requirement and essential for asset protection.
Types of Crypto Custody
Self-Custody
- User controls private keys
- Hardware wallets, software wallets
- Full responsibility for security
- Not suitable for most institutions
Third-Party Custody
- Custodian holds assets
- Insurance and security infrastructure
- Regulatory compliance
- Required for many institutional mandates
Hybrid Models
- Multi-sig with shared control
- Smart contract custody
- MPC (Multi-Party Computation) wallets
Qualified Custodian Requirements
For SEC-regulated entities, qualified custodians must:
- Be a bank, broker-dealer, FCM, or trust company
- Meet specific capital requirements
- Provide regular statements
- Maintain insurance coverage
- Submit to regulatory examinations
Leading Crypto Custodians
- Coinbase Custody: Largest crypto custodian
- Anchorage Digital: First federally chartered crypto bank
- BitGo: Pioneer in institutional custody
- Fidelity Digital: Traditional finance entrant
- Fireblocks: MPC technology focus
- Copper: European-focused custody
Custody for RWA
Tokenized RWA requires custody at multiple levels:
- Token Custody: Secure storage of blockchain tokens
- Asset Custody: Physical/legal custody of underlying assets
- Cash Custody: Fiat currency management
Security Features
- Cold storage (offline key storage)
- Multi-signature requirements
- Insurance coverage
- SOC certifications
- Penetration testing
- Geographic distribution
Custody Costs
Typically 0.1-0.5% annually on assets under custody, plus transaction fees for movements.