Introduction

Securely storing digital assets has become top of mind for individual investors. Given the increasing cyber threats and risks of financial loss from hacks or mistakes, selecting a secure crypto custody solution is crucial. In this post, we'll explore the top three crypto custody solutions designed specifically for individual investors in 2024.

What is Crypto Custody?

Crypto custody refers to the secure storage and management of digital assets. It involves safeguarding private keys, which acts as a password required to access and control these assets. Proper custody solutions aim to protect against threats like hacking, theft, and loss of private keys due to human error or hardware failure.

Traditionally, crypto custody services have primarily catered to institutional investors and high net worth individuals due to minimum balance requirements and high costs. A majority of crypto custodians impose minimum balance requirements that can range from hundreds of thousands to millions of dollars, making their services inaccessible to average individual investors. Additionally, the advanced security measures employed by these custodians, such as multi-signature wallets, institutional-grade cold storage, and robust access controls, often come with a premium price tag that can be prohibitively expensive for smaller-scale investors. However, a new set of crypto custody platforms has emerged, offering individual investors access to bank grade custody services at a fraction of the cost traditionally associated with institutional-grade solutions.

Crypto custody typically falls into two main categories: self-custody, where individuals have direct control over their digital assets through private keys, and third-party custody, where specialized firms or platforms manage and secure cryptocurrencies on behalf of clients, often providing additional services such as insurance and institutional-grade security measures. Each approach has its trade-offs in terms of convenience, control, and security.

Learn more about crypto custody here: https://www.archlending.com/blog/what-is-crypto-custody

Custodian vs Exchange

It's important to distinguish between crypto custodians and exchanges. While both handle digital assets, their roles and responsibilities differ.

Custodian: A custodian's primary function is to securely store and manage cryptocurrencies on behalf of their clients. They are typically held in trusts under your own name, making your funds safe even if the custodian is facing solvency issues.

Exchange: Cryptocurrency exchanges, on the other hand, are platforms that specialize in buying, selling, and trading various digital assets. While exchanges provide wallets for storing assets, their primary purpose is to facilitate transactions rather than long-term custody. Unlike funds held at a qualified custodian, funds held at an exchange are not necessarily protected 1:1 as there might be higher priority claims in the case of a bankruptcy.

For individuals prioritizing the security of their digital assets, opting for a dedicated custody solution is recommended. While exchanges often provide built-in wallets, they may not offer the same level of security and reliability as specialized custodians. Therefore, it is generally advised to choose a trusted custodian specifically designed to safeguard cryptocurrencies.

Best Crypto Custody Products

Arch

Arch is the most compelling offering that has emerged for individual investors seeking institutional-grade crypto custody. Partnering with BitGo, a leading crypto custodian, Arch offers accredited investors access to the same level of security and features traditionally reserved for institutional clients, but at a significantly lower cost. With Arch, you can have peace of mind knowing your digital assets are securely held in BitGo's qualified custody infrastructure, with insured values of up to $250 million for cold storage accounts. Beyond just secure storage, Arch provides a comprehensive suite of tools, including deep aggregated liquidity for trading, one-click staking options, and direct access to DeFi protocols. Notably, your crypto assets are held in trust accounts under your name, ensuring they remain separate from BitGo's bankruptcy estate in the event of any solvency issues.

Pros

• Access institutional-grade custody services

• Partnered with a leading qualified custodian with deep expertise in securing private keys

• Up to $250m in insured value for funds held in cold custody

• Trust accounts held in your name

• Supports custody of a wide array of assets

Cons

• Only available to accredited investors

  
  

Ledger

Ledger has long been a leader in the crypto hardware wallet space, and the Ledger Nano X is their flagship product for individuals looking to self-custody. Their portable device allows you to securely store and manage a wide range of cryptocurrencies offline, protecting your assets from online threats. With its Bluetooth connectivity and user-friendly interface, the Ledger Nano X offers convenience and ease of use, making it an ideal choice for both novice and experienced crypto investors.

Pros

• Best hardware self-custody solution on the market

• Straightforward onboarding without KYC

• Supports custody of a wide array of assets

Cons

• You are responsible for the security of your own assets

• Loss or theft of the device may lead to permanent loss of funds

Casa

Casa, which is a hybrid of self-custody and third-party custody, is another compelling solution in crypto custody. Casa combines multi-signature security with a mobile app, allowing you to create and manage secure crypto wallets with ease. One of Casa's standout features is their health system, which helps ensure the long-term reliability and accessibility of your private keys.

Pros

• Leading self-custody and multisig wallet offerings

• Straightforward onboarding without KYC

• No minimum deposit amount required

Cons

• Only supports BTC, ETH, USDC, and USDT

• Complexity in setting up multisig wallets

• Responsible for the security of your assets

Conclusion

Choosing the right crypto custody solution is crucial for safeguarding your digital assets. While there are many options available, the three solutions highlighted in this post – Arch, Ledger, and Casa – offer a compelling combination of security, ease of use, and additional features tailored specifically for individual investors. As the cryptocurrency landscape continues to evolve, staying informed and prioritizing the safety of your assets should remain a top priority.