Everything you need to know about cryptocurrency custody solutions
With the rising number of security risks, crypto investors are storing their digital assets on these platforms.
Although cryptocurrency is not a new term anymore for many people, they are not sure about crypto custody solutions. Since security is the primary concern in the crypto space, many crypto-based companies are offering custody solutions. The objective of these solutions is to offer independent and secure storage of cryptocurrencies.
One of the biggest advantages of these custody solutions is that it attracts institutions investors to the crypto market. Here you will get some insights into crypto custody solutions. So, let’s start with the most basic question about why do you need crypto custody solutions?
Why Crypto Custody Solutions?
There are two main reasons for crypto custody solutions existing today. They are:
- Securing Private Keys
- SEC Regulations
Let’s understand both of these key factors that urge investors to use crypto custody solutions.
Securing Private keys:
The main reason why you need crypto custody solutions is to safeguard your crypto assets. We all know that private keys help us to secure our crypto wallets from hackers. But they are complex alphanumeric hard to retain, and many people fear that they can lose their private keys. Many online platforms offer security solutions, but some of them involve risks of cyberattacks.
Apart from that, keeping your private keys offline in a paper or hardware wallet is an excellent way to secure your Bitcoins. However, losing your hardware or paper wallets is quite possible, and if it happens, it’s a permanent loss. So, securing private keys is a potential risk for retail inventors and riskier for institutional investors.
The Security Exchange Commission mandates institutional investors with customers assets over $150K must keep them in a qualified custodian. Some of the qualified custodians are banks, financial institutions, brokers, futures commission merchants, etc. There are only a few banks available that provide crypto custody solutions.
How Crypto Custody Solutions Secure Investors’ Assets
Crypto custody solutions store crypto assets securely with the help of both hot and cold storage. If you are in the crypto space for quite some time, you must have known about cold and hot storage. However, for beginners, hot storages are typically online storage, and cold storage is not connected to the web.
They are meant to offer security services and storage solutions for virtual currencies. They mainly target big players such as hedge funds in the crypto market. They generally store a large number of crypto holdings.
Choose the Best Crypto Custody Solution
Well, you have known that crypto custody solutions combine both hot and cold storage. So, when you are choosing a custodian, consider the following two things.
- Hot storage offers better liquidity than cold storage but lacks security.
- Cold storage provides high security, but investors cannot liquidate their holdings quickly.
So, the ideal option would be to choose vault storage. It’s a kind of combined storage solution that allows you to liquidate your holdings with a few online storages and secure most of the assets in large cold storage.
Some of the Popular Crypto Custodians
Xapo and Keystone Capital were two major players in offering crypto custodian services earlier. However, the most popular crypto exchange Coinbase acquired both of them to provide custody solutions in the crypto market.
Another big player in crypto custody service is Swiss Bank’s DAV. The primary target of the DAV is to offer storage and security services to institutional crypto investors. With the growing demand, the future of crypto custody solutions is quite strong as institutional investors can find an excellent way to securely store their crypto assets.
Hopefully, the above information has helped you to know about crypto custody solutions. With the rising number of security risks, crypto investors are storing their digital assets on these platforms. You can check out YuanPay Group if you are looking for a reliable and user-friendly crypto trading platform. If you think that you need security services for your crypto assets, you can choose vault storage after reading online reviews and user testimonials.
- Bitcoin versus credit cards: know the differences
- 5 advantages and 5 disadvantages of investing in Bitcoins
- There’s almost $150 billion worth of Bitcoin out there that can’t be accessed by anyone
- An NFL player for the Carolina Panthers is now being paid in Bitcoin