Crypto Custody Solutions Compared: Fireblocks vs BitGo vs Anchorage

What Is Crypto Custody?

Crypto custody refers to the safekeeping of private keys that control access to digital assets on a blockchain. Unlike a traditional bank account where the institution holds your funds directly, cryptocurrency ownership is determined entirely by who controls the private keys. If you lose your keys, you lose your assets. If someone else obtains your keys, they can move your funds irreversibly.

For individuals holding small amounts, a hardware wallet or mobile wallet may suffice. But for institutions, funds, exchanges, and high-net-worth holders managing millions or billions in digital assets, the stakes are fundamentally different. A single compromised key can result in catastrophic, unrecoverable losses. This is where professional custody solutions come in: they provide secure infrastructure, operational controls, insurance coverage, and regulatory compliance to protect digital assets at scale.

The custody market has matured rapidly. Early solutions relied on simple cold storage (offline wallets), but modern providers now use multi-party computation (MPC), hardware security modules (HSMs), multi-signature schemes, biometric verification, and policy engines that enforce governance rules before any transaction is signed. The choice of custody provider affects not just security, but also trading speed, regulatory standing, insurance coverage, and operational flexibility.

Custody Solutions Compared

The institutional custody landscape includes purpose-built platforms, qualified custodians, and self-sovereign options. Each provider takes a different approach to key management, insurance, regulatory status, and the breadth of supported assets. The table below summarizes the leading solutions.

Security Models

The core differentiator between custody providers is how they protect private keys. There are four primary approaches, each with distinct security properties and operational tradeoffs.

MPC (multi-party computation) splits the signing process across multiple parties so that no single device or person ever holds the complete private key. Fireblocks pioneered the MPC-CMP protocol, which distributes key shares across the client, the Fireblocks infrastructure, and an independent recovery partner. A transaction requires a threshold of these shares to produce a valid signature. The advantage is that there is no single point of compromise: an attacker would need to breach multiple independent systems simultaneously. Copper uses a similar MPC approach through its ClearLoop system, which also enables off-exchange settlement for trading.

Multi-signature (multisig) uses native blockchain functionality to require multiple independent keys to authorize a transaction. BitGo's standard configuration is a 2-of-3 multisig: the client holds one key, BitGo holds one, and a third is stored with an independent recovery service. Unlike MPC, multisig is verifiable on-chain because the signing policy is encoded in the wallet address itself. The tradeoff is that multisig is blockchain-specific and not all chains support it natively.

HSM (hardware security module) based custody uses tamper-resistant hardware devices that generate and store keys in a physically isolated environment. Anchorage Digital combines HSMs with biometric authentication and governance policies enforced in hardware. Coinbase Prime uses HSM-backed cold storage where the majority of funds are kept offline in geographically distributed vaults. HSMs provide strong physical security but require careful operational procedures for key ceremony and recovery.

Secure Element hardware, used by Ledger Enterprise, embeds cryptographic operations directly into a certified chip. The private key never leaves the chip, and all signing happens within the hardware boundary. This is the same technology used in chip-based credit cards and passports, adapted for cryptocurrency key management.

Self-Custody vs Institutional Custody

The choice between self-custody and institutional custody is not simply about trust: it involves regulatory requirements, operational capacity, insurance needs, and the specific use case.

Self-custody means you control the private keys directly. For individuals, this typically involves a hardware wallet (like a Ledger or Trezor) or a software wallet. For organizations that want self-sovereignty without relying on a third party, multi-signature setups (such as a 2-of-3 or 3-of-5 configuration) distribute key control across multiple parties within the organization. The benefit is total control: no counterparty risk, no withdrawal restrictions, and no dependence on a custodian's solvency. The cost is operational complexity. You need robust key management procedures, secure backup strategies, and the technical capability to handle recovery scenarios.

Institutional custody delegates key management to a specialized provider. This is often required by regulation: investment funds, registered investment advisors, and ETF issuers typically must use a qualified custodian. Beyond compliance, institutional custodians provide insurance coverage (ranging from $30M to $350M+ depending on the provider), 24/7 operational support, policy engines that enforce approval workflows, and integration with trading and settlement infrastructure.

A hybrid approach is increasingly common. Organizations use institutional custody for the bulk of their holdings (cold storage with insurance) while maintaining self-custody wallets for operational liquidity, DeFi participation, or assets not supported by their custodian. Fireblocks and Copper are designed with this hybrid model in mind, providing both custodial vaults and self-managed wallet infrastructure through the same platform.

How to Choose a Custody Provider

Selecting a custody solution requires evaluating several factors that will vary based on your organization's size, regulatory environment, and operational needs.

• Regulatory requirements: if you are a registered fund, ETF issuer, or fiduciary, you may be legally required to use a qualified custodian. Anchorage Digital holds a federal bank charter from the OCC, making it one of few providers with qualified custodian status. BitGo Trust and Coinbase Custody are also qualified custodians under state trust company charters.
• Insurance coverage: evaluate the provider's insurance limits and what they cover. Most policies cover theft from external attacks and insider fraud, but not market losses or protocol failures. Anchorage offers $350M+ in coverage, Coinbase Prime $320M through the broader Coinbase insurance program, BitGo $250M, and Fireblocks $30M+ with options to increase.
• Asset support: if you hold a diverse portfolio across multiple chains, Ledger Enterprise (5,500+ assets) and Fireblocks (1,500+) offer the broadest coverage. Anchorage supports a smaller but curated set of approximately 60 assets, which may be sufficient for conservative institutional portfolios.
• Trading integration: if you trade actively, the ability to move assets quickly between custody and exchange is critical. Copper's ClearLoop enables off-exchange trading where assets remain in custody during the trade. Fireblocks connects to major exchanges through its network. Coinbase Prime integrates custody with Coinbase's exchange natively.
• Minimum thresholds: Anchorage targets large institutional clients with a $10M+ minimum. Fireblocks, BitGo, and Copper generally start at $1M+. Coinbase Prime is accessible from $500K+. Ledger Enterprise and self-custody multisig setups have no minimum requirements.

The Role of MPC and Multisig

MPC and multisig are the two dominant cryptographic approaches to distributed key management, and understanding their differences is essential for evaluating custody solutions.

Multisig (multi-signature) is a blockchain-native feature. A multisig wallet requires M-of-N keys to sign a transaction (for example, 2 of 3 or 3 of 5). Each key is a complete, independent private key, and the signing policy is enforced by the blockchain itself. Bitcoin has robust native multisig support. Ethereum supports multisig through smart contracts (like Gnosis Safe). The advantage is transparency: the signing policy is publicly verifiable on-chain. The limitation is that not all blockchains support multisig natively, and cross-chain multisig wallets are not possible.

MPC (multi-party computation) operates at the cryptographic layer rather than the blockchain layer. Instead of creating multiple independent keys, MPC splits a single private key into shares distributed among multiple parties. These parties collaboratively compute a valid signature without ever reconstructing the full key. The resulting transaction looks identical to a standard single-key transaction on-chain. This means MPC works on any blockchain that supports standard signatures, making it inherently chain-agnostic. The tradeoff is that MPC is more complex to implement correctly, the signing policy is not visible on-chain, and the security guarantees depend on the specific MPC protocol used.

In practice, many institutional setups combine both approaches. Fireblocks uses MPC for signing while layering governance policies (approval quorums, whitelists, time locks) on top. BitGo uses native multisig on chains that support it and MPC on chains that do not. The choice between MPC and multisig often comes down to which chains you need to support and whether on-chain verifiability of the signing policy is important to your compliance framework.

Frequently Asked Questions

What is a qualified custodian in crypto?

A qualified custodian is a financial institution that meets specific regulatory requirements to hold assets on behalf of clients. In the United States, this typically means a bank, trust company, or registered broker-dealer subject to examination by a federal or state regulator. Anchorage Digital holds a federal bank charter from the OCC, making it a qualified custodian. BitGo Trust and Coinbase Custody operate as state-chartered trust companies. Registered investment advisors managing client funds above certain thresholds are generally required by SEC rules to use a qualified custodian.

How much does institutional crypto custody cost?

Custody fees typically range from 0.05% to 0.50% of assets under custody annually, depending on the provider, the amount held, and the services included. Some providers charge flat monthly fees for smaller accounts or per-transaction fees for withdrawals and transfers. Setup fees, integration costs, and insurance premiums may apply separately. Most providers offer tiered pricing where the fee percentage decreases as the custody balance increases. Contact providers directly for a quote, as pricing is often negotiated individually for institutional clients.

What is the difference between hot and cold storage?

Hot storage refers to wallets connected to the internet, enabling fast transactions but with higher exposure to online attacks. Cold storage refers to wallets kept completely offline, providing stronger security at the cost of slower access. Most institutional custodians keep the majority of client assets (90% or more) in cold storage and maintain a smaller hot wallet balance for day-to-day withdrawals and trading. The ratio between hot and cold varies by provider and can often be configured based on the client's liquidity needs.

Is self-custody safer than institutional custody?

Neither is inherently safer: it depends on the threat model and operational capability. Self-custody eliminates counterparty risk (you are not depending on a custodian's security or solvency), but it requires rigorous key management, physical security, and backup procedures. Institutional custody provides professional security infrastructure, insurance coverage, and regulatory compliance, but introduces counterparty risk. For organizations without dedicated security teams, institutional custody is generally the safer option. For technically capable individuals or organizations that prioritize sovereignty, well-implemented self-custody with multisig can provide equivalent or superior security.

What happens to my crypto if a custodian goes bankrupt?

This depends on the custodian's legal structure and the jurisdiction. Qualified custodians are required to segregate client assets from their own corporate assets, meaning client funds should not be treated as part of the bankruptcy estate. However, the legal landscape is still evolving and outcomes can vary. The collapse of FTX demonstrated the risk of commingled funds at unregulated entities. When evaluating custodians, verify that they maintain proper asset segregation, carry adequate insurance, and operate under a regulatory framework that provides legal protections in insolvency scenarios.

What is MPC-CMP?

MPC-CMP (multi-party computation using the CMP protocol) is an advanced key management technology developed by Fireblocks. CMP stands for Canetti-Makriyannis-Peled, the researchers who designed the protocol. It splits a private key into multiple shares distributed across independent parties. When a transaction needs to be signed, these parties perform a cryptographic computation that produces a valid signature without ever reconstructing the full key. MPC-CMP is faster and more efficient than earlier MPC protocols, supports key refresh (rotating shares without changing the public key), and works across any blockchain that uses standard ECDSA or EdDSA signatures.

Can I use multiple custody providers?

Yes, and many institutions do. Using multiple custody providers reduces concentration risk: if one provider experiences a security incident or operational disruption, only a portion of your assets is affected. A common approach is to use one provider for cold storage (maximum security for long-term holdings) and another for warm or hot operations (trading, DeFi, payments). Some organizations also split custody across providers by asset type or by blockchain. The tradeoff is increased operational complexity and potentially higher total fees.

How does Spark handle custody?

Spark operates on a self-custodial model built on Bitcoin. Users retain control of their own keys, and the Spark protocol enables fast, low-cost transfers of Bitcoin and stablecoins (like USDB) without requiring a third-party custodian. For institutions looking to combine the security of self-custody with the operational convenience of managed infrastructure, Spark provides an SDK and developer tools that integrate with existing custody setups. Learn more at docs.spark.money.

This tool is for informational purposes only. Insurance coverage, supported assets, and fee structures may change. Always verify current terms directly with each custody provider before making decisions.