Crypto Custody
Web3 / wallets security
The secure holding of cryptocurrency private keys or digital assets on behalf of clients, an institutional service that parallels the custodial role banks and brokerage firms play for traditional financial assets. Self-custody, where individuals hold their own private keys, is the purest expression of crypto's permissionless design, but institutional investors, funds, and regulated entities typically require third-party custodians to meet fiduciary standards, insurance requirements, and operational risk controls that self-custody cannot satisfy. Qualified custodians in crypto include dedicated firms like Coinbase Custody, Anchorage Digital (the first federally chartered crypto bank), BitGo, and Fireblocks, as well as traditional financial custodians like BNY Mellon and State Street who have entered the space. SAB 121, issued by the SEC in 2022, effectively prevented US banks from offering crypto custody by requiring them to record client crypto as balance sheet liabilities, a requirement rescinded by SAB 122 in early 2025. Example: The repeal of SAB 121 in January 2025 opened the door for major US banks including JPMorgan and Bank of America to begin offering crypto custody services to institutional clients, potentially shifting billions in custodied assets from dedicated crypto custodians to banks that already hold institutional relationships and infrastructure. Goldman Sachs announced crypto custody service plans within months of the repeal. Why it matters for Web3: Institutional crypto custody is a prerequisite for many forms of institutional participation in digital asset markets. Pension funds, endowments, and regulated funds typically require assets to be held by a qualified custodian with insurance and regulatory oversight. The expansion of regulated custody options has been a necessary enabler of the institutional adoption wave of 2024-2025, alongside ETF approvals and regulatory clarity on asset classification.
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