Health, Wealth, and Happiness

April 10, 2023

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”

- Robert Kiyosaki

In today's issue: We take a detailed look at the Best Bitcoin and Crypto Custody Providers for 2023, our top picks on third-party services to safely store your crypto.

While holding your coins in a hardware wallet is a good choice (we've rated these too in the Top Crypto Cold Storage Wallets for 2023), those with larger portfolios may want to consider institutional-level custody solutions.

For today's newsletter, we've updated and improved our guide to the top bitcoin and crypto custody providers. While some are out of reach for the average individual, others are happy to take on retail investors (that's us). Read on.

Must Read

Today's most important story for crypto investors.

"We Made Close to $1 Million": Inside Airdrop Farming(The Block)

Airdrops have long been popular as ways to pick up free coins. While airdrops waned in 2022, they're back with a vengeance in 2023 thanks to token giveaways from Layer-2 networks like Optimism and Arbitrum.

Since airdrops are usually paid out to early users of a crypto project, "airdrop farmers" try to determine which projects might have future airdrops, then use those projects early to maximize their rewards.

Airdrop farming can be highly lucrative as some tokens go on to appreciate in value significantly, making a single airdrop worth thousands -- or even hundreds of thousands -- of dollars.

“We made close to $1 million,” said a pseudonymous Russian individual known as LEOresearch, referring to the total amount their team generated. “Blur gave us something like $300,000, Arbitrum gave us around $180,000, Aptos gave us $125,000 and Optimism $120,000.”

There are risks with airdrop farming, as well as ethical concerns. Some users create multiple wallets to maximize their rewards. If the point of airdrops is to incentivize long-term users, is it effective to award tokens to short-term farmers?

Investor takeaway: Airdrops can be lucrative ways to participate in crypto, but research is key. There are several sites where you can start (AlphaDrops and Airdrops.io), but airdrop farmers indicate the best information comes from private groups on Telegram, Discord, and other communication platforms.

Due to the speculative nature of airdrop farming (and the transaction fees), it's not recommended for most investors. It's hard to build long-term wealth on free giveaways. Spend that time researching good, long-term investments instead.

Best Bitcoin and Crypto Custody Providers, Rated and Reviewed for 2023

by Eddie Mitchell

What are bitcoin custody services? These are third-party services that safely store your crypto. Think of them like “bitcoin banks.” They generally cater to people holding large amounts of crypto: institutional investors, hedge funds, and high-net-worth individuals. Everyone else can use services like Coinbase, which custody crypto for the rest of us.

In this guide, our editors reveal their picks for the top crypto custodial services, rated and reviewed for 2023.

What Are Crypto Custodians?

Crypto custodians are third-party providers that hold and safeguard digital assets on behalf of investors, institutions, and other corporate entities. They look after your money for you. This way, you can get back to making more of it.

Historically, only high-net-worth individuals and institutional investors used custodians, but with the recent, unprecedented rise of retail investing, crypto custodians are open to everyone.

It’s hard to keep track of your private keys, so larger investors prefer to leave the security of their digital assets to custodial services to better ensure their funds can’t be accessed by hackers or other malicious actors.

By using custodians, investors can avoid the technical side of storing crypto while resting assured that their digital assets are safe. Due to increasing demand from institutional investors, more bitcoin/crypto custodian service providers have emerged over the past few years.

Before we begin, remember a “hot wallet” is stored online (like an online bank account), which makes it easier to access but more vulnerable to hackers, while a “cold wallet” is stored offline (like a bank vault), typically in a secure location. Most custodians use a combination of both hot and cold wallets.

Here are our picks for the best crypto custodians for your investment needs.

Top Bitcoin Custodians (2023 Rankings)

Sources: Individual company websites

BitGo

Since its founding in 2013, BitGo has been a global leader in digital asset storage. BitGo manages more than 100 digital currencies and tokens as a certified custodian through custody policy regulations that are institutional-grade. In addition, the firm has cold storage systems and configurable, multi-user accounts.

BitGo is probably the gold standard in crypto custody, being officially controlled by South Dakota’s banking division. The platform, mainly a cold-wallet custody provider, provides tested, reviewed, and isolated accounts for maximum protection. Third-party auditors audit the firm regularly to ensure the platform remains top-notch in its levels of security and functionality. (BMJ Score: 4.5)

Gemini

Gemini is an established digital asset exchange located in New York that offers professional clients a custodial crypto service. Originally known as Vo1t, the project was renamed Genesis Custody after being taken over by the Genesis Group to expand its digital asset servicing operations. Genesis Custody is one of the leading cold wallet crypto custodian service providers.

The program employs many military-grade levels of encryption while protecting the private keys of clients in a geographically dispersed manner. Thus, the firm makes use of several deactivated nuclear bunkers for high-level private protection.

Genesis is also a successful digital currency prime brokerage and a global pioneer in institutional digital asset markets. Genesis handles billions of dollars in digital currency swaps, borrowings, and exchanges regularly. It provides a low-cost custody solution for bitcoin, Ether, Litecoin, Zcash, Bitcoin Cash, and storage in a fully regulated setting. (BMJ Score: 4.0)

Cobo

With its strict focus on crypto, Cobo is specifically designed for top institutions that buy and sell large amounts of crypto. Cobo provides crypto wallet services, like every platform on the list, but where Cobo stands out is in its in-house staking platform where coins can earn interest.

Founded by crypto enthusiasts Discus Fish and Changhao Jiang in 2017, Cobo pays surprisingly high rates in interest to encourage people to deposit more.

Cobo sells software-as-a-service (SaaS) to businesses, enabling companies to set up their own wallets or DeFi platforms. Also, Cobo supports 60 chains and more than 1,600 coins across 11 exchanges. (BMJ Score: 3.5)

Fireblocks

Founded in 2018, Fireblocks is a high-security digital asset custody platform designed for institutional and enterprise clients. It provides an all-in-one platform for storing, transferring, and issuing digital assets securely, reliably, and quickly.

Fireblocks provides multi-layered security features including biometric verification, multi-party approval workflows, and hot and cold wallet solutions.

Fireblocks supports a wide range of assets like BTC, Ether, Litecoin and others. It also offers insurance coverage of up to $30 million. (BMJ Score: 3.5)

Coinbase Custody

Located in San Francisco, Coinbase debuted its custody service in 2012, capitalizing on its strength as the leading bitcoin exchange in the U.S. Coinbase uses its access to military-grade cold wallets to offer the highest level of protection for digital money.

Coinbase, as a leading bitcoin custody provider in the market, subjects its technology to frequent, standardized auditing operations. Additionally, Coinbase users can stake funds straight from their offline wallets to earn yield (like earning interest on a money market or savings account). Coinbase Custody, in collaboration with a registered broker-dealer, allows investors to secure digital assets properly. (BMJ Score: 3.0)

Etana

Brandon Russell created Etana in 2014 in Denver, Colorado. Today, its services reach every corner of the globe. It's free to sign up in over 100 countries to use the platform for a broad range of custodial services.

Etana facilitates the custody of fiat and digital currencies (like bitcoin and USD) and makes these assets available at any partner of Etana where a customer holds an account.

All assets are held in insured bank accounts with Etana, and it integrates multiple SOC-compliant, sub-custodian wallet providers.

Users can also transfer funds between their Etana bank accounts and wallets instantly, oftentimes with no conversion fees. (BMJ Score: 3.0)

Kingdom Trust

Kingdom Trust is among the leading independent, certified custodians of alternative assets. It provides innovative custodial options and escrow solutions to individual and institutional investors. The company offers global services for solo 401(k) holders and self-directed IRAs, single-member LLCs, investment advisers, broker-dealers, family offices, sponsors, consultancy companies, private equity funds, and other investment platforms.

Kingdom Trust has a longstanding reputation as a reliable financial custodian, handling everything from precious metals to pension money. The platform’s reach has also expanded to bring professional custodial services under its many operations.

Kingdom Trust uses its expertise as an institutional custodian to supply digital custodial services to hedge funds, banks, family offices, and RIAs that intend to participate in digital assets, but do not want to store them personally. Furthermore, Kingdom Trust insures all the assets it holds to provide further protection to its clientele. (BMJ Score: 3.0)

Ledger Enterprise

Ledger Enterprise is a custody provider known for its crypto hardware wallet. It's designed to provide businesses and institutional investors with a secure and reliable way to manage their assets, offering a combination of hardware and software components to provide the highest level of security.

Ledger Enterprise uses a multi-level security architecture that includes dedicated hardware devices, secure elements, and multi-layer authentication. It also offers offline storage, backup and recovery, advanced access control, and auditable logs to help ensure safety.

Ledger also provides a range of integrations with third-party service providers. This includes exchanges, market makers and DeFi platforms. This allows businesses to easily execute trades, manage liquidity, and access other crypto-related services directly from the Ledger platform. (BMJ Score: 3.0)

Casa

Headquartered in Denver, Colorado, Casa was founded by Jeremy Welch in 2016. In 2020, it announced its laser focus on becoming a secure, self-custody firm for bitcoin.

Casa’s services include multi-signature wallets, key management, and secure multi-storage in a geographically distributed network of vaults. As stated, its approach to security is based on the principle of “self-custody,” where users maintain control of their private keys, while Casa provides the infrastructure and tools to help them better manage their assets.

Casa also offers additional features like inheritance planning and a dedicated support team to assist clients. (BMJ Score: 2.5)

Fidelity Digital Assets

Fidelity Digital Assets is the newest service on this list offered by Fidelity Investments, a company with over 40 million customers. The company launched the platform in 2018 after four years of researching bitcoin and blockchain technology during the digital cash revolution and in response to growing demand from institutional investors.

The platform offers cold-vaulted storage, optimized custody, a multi-tiered approval structure, and multi-site storage. Traders can also trade seven days a week.

One downfall is Fidelity Digital Assets currently only offers bitcoin and Ether custody and trading. This lack of support for a broader range of crypto, the relative late launch of Fidelity Digital Assets, and the lack of insurance on crypto products all give it a lower score. (BMJ Score: 2.0)

Investor Takeaway

BitGo, Coinbase, and Gemini have the most established reputations in the crypto custody market. They rate at the top of our rankings. That said, despite its low ranking, Fidelity also has a solid reputation within traditional finance. We did find that Gemini is likely the best choice for retail investors, but expect many more “bitcoin banks” to emerge in the coming years (also, see our guide to the best bitcoin-friendly banks).

As Wall Street wakes up to crypto as an investment asset class, this will also result in more bitcoin custodian solutions emerging.

Fund managers will continue to become more open to investing in bitcoin if they can store their investments with regulated custodians in the same way they do with stocks and bonds. Hence, the more this market segment grows, the more institutional investment you should expect for BTC and other digital currencies.

ICYMI