Hodling in difficult times has historically proven to be a long-term winning strategy. Keeping your cryptocurrency in your own cold storage is by default a good idea as far as security is concerned. But if you don’t trust yourself to not lose a small hardware device or a piece of paper, then there are alternatives that involve trusting others, for good or bad.
Bunker in the Alps Sounds Like a Good Option
Companies providing vault storage services for crypto assets gained prominence a couple of years ago, following the Bitcoin boom that brought many new investors into the space. A few of them have already established themselves as reliable platforms for crypto storage. Hong Kong-headquartered bitcoin wallet and cold storage provider Xapo is a good example. In the spring of 2018, it was revealed that the company held an estimated 6.25% of BTC’s almost $160 billion market capitalization at the time, or more than 1,000,000 BTC.
Xapo, founded by Argentine entrepreneur Wences Casares, attracted media attention with its focus on building ultra-secure facilities for cryptocurrency storage. The company had reportedly built a network of underground vaults on five continents, most notably one in a decommissioned military bunker in Switzerland, where clients’ private keys are kept on encrypted drives behind steel doors designed to withstand a nuclear blast and guarded by security personnel and systems. Even owners would need a couple of days to get access to their money.
In August 2019, U.S. crypto exchange Coinbase bought Xapo’s institutional businesses. Announcing the acquisition, the trading platform revealed that its Coinbase Custody subsidiary had grown to over $7 billion in assets under custody in just over a year since its launch in July 2018. The funds are stored on behalf of more than 120 clients in 14 countries, the company detailed. Coinbase acknowledged Xapo’s expertise in security techniques. Its custody arm now serves hedge funds, family offices, endowments, and proprietary trading desks, supporting major cryptocurrencies like BTC, ETH and XRP. The assets are insured by global leaders such as Lloyd’s of London.
Switzerland a Magnet for Crypto Riches
With its crypto-friendly regulations, Switzerland is very attractive for companies operating with cryptocurrencies and over 800 of them are based or represented in the country, including providers and developers of crypto custody solutions. Another company working in the niche, California-based Bitgo, announced in February the establishment of new custodial entities in Switzerland and Germany, which introduced a licensing regime for crypto custodians. The Swiss subsidiary is based in Zug, epicenter of the Alpine nation’s Crypto Valley. Both firms are regulated in their respective jurisdictions and will address increased European demand.
Bitgo is a major player with global presence in the market for institutional grade security solutions for blockchain-based currencies. Its Bitgo Custody platform employs a multi-signature system to secure your digital assets including security tokens. It supports a total of more than 100 coins and tokens that can be held with the Bitgo Trust Company, a qualified custodian and liquidity provider, in a cold storage bank-grade vault.
The service implements various controls including multiple approvals, spending limits, and whitelists, Bitgo’s website explains. The company’s $100 million insurance policy covers crypto assets when the private keys are held exclusively by Bitgo Trust Company or Bitgo Inc., in the event of third-party hacks, copying, theft or loss of private keys, insider theft or dishonest acts by Bitgo employees or executives.
Bitcoin Suisse is a Zug-based company specializing in crypto-financial services offering cold storage for digital assets. The Bitcoin Suisse Vault has been built to provide institutional-grade and fully audited crypto asset custody. The platform caters to the specific needs of its clients allowing them to customize the multi-signing process and define who can view and withdraw the stored assets. Besides corporate users such as financial service providers and institutional investors, private investors can also use it to store a list of cryptocurrencies including BTC, BCH, ETH, XRP, LTC as well as ERC20/223 tokens.
Bitcoin Suisse Vault is based on a solution developed by Swiss Crypto Vault AG, a wholly owned subsidiary of Bitcoin Suisse AG. Clients can deposit funds into the Swiss Crypto Vault by sending the coins to a unique public address, and their holdings are never mixed with assets belonging to others. Withdrawals are initiated by filing a request through the online portal which has to be verified independently by the user, Swiss Crypto Vault and Bitcoin Suisse before its execution, which can still be canceled by controllers appointed by the client. Before a transaction can be broadcasted to the blockchain, it must also get the green light from approvers, again chosen by the account holder.
More Providers Working on Storage Solutions
Other companies are developing their own safe storage solutions for cryptocurrencies. Metaco’s institutional custody platform, Silo, implements a hot-to-cold digital asset management technology. It’s a solution that integrates both software and hardware elements. It’s designed for banks which need a self-custody infrastructure that gives them control over their custodial activities. Silo was announced in January 2018 and has been developed together with data security agency Guardtime. It’s used by platforms such as Swiss Crypto Exchange (SCX). Metaco is now preparing to launch Cargo, a regulated service for smaller institutions looking for external digital asset storage.
Traditional financial institutions venturing into the crypto space are also working to offer custodial services. Last year, Arab Bank (Switzerland) joined forces with the blockchain company Taurus to provide its customers with custody and brokerage for their crypto holdings. Taurus is also helping Bank Vontobel to operate a digital asset vault allowing institutional investors to store and trade cryptocurrencies outside their balance sheets. Falcon Private Bank and digital trading platform Swissquote provide custodial solutions to investors interested in token sales through partnerships in the crypto industry. In January, Swiss bank Julius Baer teamed up with licensed crypto bank SEBA to offer storage for digital assets, and Liechtenstein’s blockchain banking provider Bank Frick introduced support for bitcoin cash (BCH) to its storage solutions.
Would you use crypto custody services to store the coins you want to hodl? Share your thoughts on the subject in the comments section below.
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