What is Bitcoin Custody?

Bitcoin custody refers to how your Bitcoin private keys — and therefore your Bitcoin — are stored and secured. Whoever controls the private keys controls the Bitcoin. This fundamental concept drives every custody decision.

Why Custody Matters

When you buy Bitcoin on an exchange, the exchange holds the private keys. This means you're trusting the exchange to safeguard your assets. History has shown this trust can be misplaced: Mt. Gox (2014), QuadrigaCX (2019), FTX (2022), and Celsius (2022) all resulted in users losing access to their Bitcoin.

Types of Bitcoin Custody

There are six main approaches to Bitcoin custody, each with different tradeoffs between security, convenience, and control:

Multi-Institution Custody distributes your Bitcoin across multiple independent custodians. No single entity can compromise your holdings. This is the most resilient institutional model.

Self-Custody means you hold your own private keys, typically using hardware wallets and multisignature setups. Maximum sovereignty, maximum responsibility.

Exchange Custody is the simplest approach — you buy Bitcoin and leave it on the exchange. Convenient but introduces significant counterparty risk.

Qualified Custodians are regulated financial institutions meeting SEC requirements. They provide institutional-grade security, insurance, and compliance.

Cold Storage keeps your private keys on devices that never connect to the internet. Air-gapped security for long-term holdings.

Collaborative Custody splits keys between you and a service provider. You maintain control while having a professional backup.

How to Choose

The right custody solution depends on your specific situation — how much Bitcoin you hold, your technical expertise, regulatory requirements, and how often you need access. Our interactive tools can help you decide.