Crypto custody is a term that describes the process of protecting your assets from theft. When it comes to crypto custodians, it works a little differently than a traditional custodian, as it refers to the protection of your private keys, the key part that allows you to access the funds stored in your crypto wallet.
Crypto custodians are essential to the widespread adoption of digital assets. Even now, many institutional investors are reluctant to purchase digital assets due to a lack of security. Institutions that manage large amounts of money, such as hedge funds, pension funds, investment banks, and family offices, are required by regulation to have a custodial partner to keep client funds safe.
As more institutional investors start dabbling in digital assets and companies like MicroStrategy put large amounts of cryptocurrencies on their balance sheets, demand for crypto custody services has skyrocketed. According to a Blockdata report, the size of digital assets under custody grew sevenfold between January 2019 and January 2022, from $32 billion to $223 billion.