Custody models & services
Beginner Intermediate Expert
"Not your keys, not your coins" is true — but holding every key alone is also a risk. Between full self-custody and handing everything to an exchange sits a spectrum of models. Choose consciously.
Last fact-checked 24 October 2026 (time-sensitive claims re-checked against the linked sources).
How this page is layeredBeginner: exchange or self-custody? the basics, what protects you in the UK and USA, moving coins off an exchange safely and the custody spectrum. Intermediate: collaborative custody, safe deposit boxes, professionals pros, cons and pitfalls by model and the SEC's questions for custodians. Expert: institutional custodians, what happens if a custodian fails and primary sources.
Exchange or self-custody? The basics Beginner
If you hold coins on an exchange or app, the firm holds the keys and you hold a claim against the firm. If you hold your own keys (for example on a hardware wallet), nobody can freeze or lose your coins for you, but nobody can get them back for you either. The FTC puts it plainly: if your exchange goes out of business, you lose your password or your wallet is compromised, "no one can step in to help you recover your funds" (FTC).
| Question | On an exchange | Self-custody |
|---|---|---|
| Who holds the keys | The firm | You |
| Main risks | Firm failure, fraud, account freezes, hacks of the firm | Losing the backup, theft of the backup, scams, mistakes when sending |
| If you forget a password | Usually recoverable through the firm | Only your own backup can help |
| On your death | Executors deal with the firm | Heirs need your plan; see estate planning |
Many people use both: a small amount on an exchange for trading, and longer-term savings in self-custody. Sparrow Wallet's best-practice guide, which this site treats as community advice, suggests moving from simpler single-signature set-ups to multisig as holdings grow (Sparrow).
Exchange or self-custody: what protects you in the UK and USA Beginner Intermediate
Bank deposits come with a safety net. Crypto held for you by a company usually does not, and crypto you hold yourself never does: if you lose your keys, the SEC warns, "you permanently lose access" (SEC Investor Bulletin, 12 December 2025). The table sets out where UK and US readers stand. For the compensation details, see UK vs USA on the compare page.
| Question | United Kingdom | United States |
|---|---|---|
| Is my exchange balance protected if the firm fails? | Generally not. The FSCS says the FCA "does not regulate most cryptoassets, so FSCS cannot protect you if a platform that exchanges or holds them goes out of business" (FSCS). The FSCS only pays out when an authorised firm fails while carrying out a regulated activity (FSCS eligibility). | Generally not. The FDIC lists crypto assets among the products it does not insure (FDIC). SIPC "does not protect any digital or crypto asset that does not qualify as a 'security'". Its page quotes the SEC and CFTC naming bitcoin and ether among examples of "digital commodities" (SIPC). |
| Can I complain to an ombudsman? | Usually not. Report Fraud says most crypto activities are unregulated, so you will not have access to the Financial Ombudsman Service (Report Fraud). | The SEC suggests researching a custodian before you deposit: search for complaints and find out how it is regulated (SEC). |
| If I am scammed | Report to Report Fraud (England, Wales and Northern Ireland) or Police Scotland on 101, then the FCA. The FCA says it cannot help you get your money back (FCA). | Report to the FBI's IC3 and the FTC at ReportFraud.ftc.gov. |
| Withdrawing to my own wallet | Since 1 September 2023, UK crypto firms have had to collect, verify and share information about transfers (the "Travel Rule"), so expect questions about withdrawals (FCA). US: FinCEN's "Funds Travel Rule" applies to transmittals of $3,000 or more, including crypto (31 CFR 1010.410(f); FIN-2019-G001); the 2020 unhosted-wallet proposal was withdrawn on 6 October 2026 (Federal Register). | Self-custody means "sole responsibility" for your keys and seed phrase (SEC). |
| What is changing? | A new FCA authorisation regime, covering safeguarding (custody), applies from 25 October 2027 (FCA). Check what a firm actually offers. Do not assume FSCS cover. | The SEC's December 2025 bulletin lists questions to ask any custodian; see below. |
Trade-offs in plain English Beginner
Exchange: pros
- Forgotten passwords can usually be reset
- Easy to buy, sell and cash out
- Executors deal with a firm that has a bereavement process (see directory)
Exchange: cons
- If the firm is hacked, shuts down or goes bankrupt, "you may lose access" (SEC)
- No FSCS cover in the UK and no FDIC or SIPC cover in the US for ordinary crypto (sources above)
Self-custody: cons and pitfalls
Community advice (labelled: experience shared by users, not official guidance)
- Community advice: a common pattern is a small spending balance on an exchange and long-term savings in self-custody, moved across in stages after a test restore
- Community advice: whichever you choose, write down where things are for your executor (see letter of instruction)
Questions the SEC suggests asking a custodian Intermediate
These add to the custody-agreement questions below. They are paraphrased from the SEC's bulletin (SEC):
- What is its background and complaint history, and how is it regulated?
- Which assets can you hold there?
- Does it hold assets in hot wallets, cold wallets or both, and does it subcontract storage to someone else?
- Does it lend out customer assets ("rehypothecation") or mix them together ("commingling"), and does it need your consent?
- What insurance applies to loss or theft, and on what terms?
- What personal data does it keep, and does it sell any?
- What fees does it charge?
Moving coins off an exchange safely, step by step Beginner Intermediate
- Set up and test first. Create and test-restore your wallet before moving anything (Start here, step 5).
- Secure the exchange account. Use a unique password and app-based or security-key two-factor authentication rather than text messages. The FBI recorded 1,611 SIM-swap complaints with more than $68 million in losses in 2021, and recommends authenticator apps, physical security tokens or biometrics (FBI/IC3). Turn on 2-step verification for your email as well: the NCSC lists email among your most important accounts (NCSC).
- Get the address from the device. Copy the receive address from your wallet's Receive screen and check it on the device's own screen, never from your transaction history (Ledger).
- Match the coin and network. Make sure the exchange's withdrawal screen shows the same coin and network that your wallet account uses. If you are unsure, stop and check the wallet maker's help pages.
- Send a small test. Wait until it shows in your wallet. Trezor's guidance on moving funds uses the same step (Trezor).
- Send the rest, then check the balance on your own wallet.
- Keep a record of the date, the amounts and the exchange so that your tax records show it was a transfer between your own accounts (see UK and US tax records).
Pros of moving in stages
- A mistake costs only the test amount
- You practise sending before a large transfer
Cons
Pitfalls
- Rushing because a call or message says your account is "at risk" (see the Coinbase impersonation case)
- Leaving a forgotten balance behind. In the US, dormant accounts can be handed to a state as unclaimed property
- Withdrawing to an address pasted from history or a chat
Community advice (labelled: experience shared by users, not official guidance)
- Community advice: write down the first receive address and check it after any future restore
- Community advice: if the amount would hurt to lose, do the test and the main transfer on different days so that you are not rushed
The custody spectrum Beginner
Solo self-custodySingle-sig, you hold everything
→
Self-custody, splitSLIP-39 / your own multisig
→
Collaborative custodyYou hold 2 of 3 keys, a firm holds 1
→
Multi-institutionKeys held by separate institutions
→
Full custodianExchange or qualified custodian
Left: maximum control and responsibility. Right: maximum convenience and counterparty risk.
Collaborative custody providers Intermediate
| Provider | Model | Assets | Inheritance | Notes |
|---|---|---|---|---|
| Casa | 2-of-3 or 3-of-5 multisig; Casa holds one recovery key | BTC; ETH & stablecoins | Included; 6-month claim window; enhanced verification for private clients (docs) | Subscription: Standard $250/yr (3-key vault), Premium $2,100/yr (5-key vault, hardware included), Private Client $7,500/yr (Casa pricing, checked 24 October 2026). Enhanced verification is US-only. |
| Unchained | 2-of-3; you hold two keys | BTC | Inheritance Protocol, trust vaults, TOD beneficiaries (details) | US-focused; also IRA products |
| Nunchuk | Self-managed multisig; optional assisted plans with platform key | BTC | On-chain timelock or assisted off-chain (details) | No-KYC model |
| Onramp | Multi-institution custody (2-of-3 across institutions) | BTC | Via account structure | US-focused; client holds no keys |
| AnchorWatch | Multisig with optional insurance | BTC | Check offering | Eligibility restrictions apply |
| Bitkey | 2-of-3: hardware + phone + Block server | BTC | One beneficiary, who needs their own Bitkey; a claim starts a 6-month delay you can cancel. Bitkey says a beneficiary setting does not override a will (Bitkey inheritance) | Consumer-friendly; no seed words |
| Liana (software) | Your keys + timelocked recovery keys | BTC | Heir key valid after inactivity period | Open source; no company in the loop |
Pros
- Professional key management and support
- Survive losing one of your keys
- Structured inheritance
Cons
- Recurring fees
- Some KYC and data held by the firm
- Jurisdiction and business-continuity risk
Common pitfalls
- Not keeping your own copy of the wallet descriptor/config
- Heirs who don't know the provider exists
- Storing your two keys in the same building
Advice
- Ask: "Can I recover without you if you disappear?" — with standard multisig and your descriptor, usually yes
- Compare services independently (independent comparison)
Pros, cons and pitfalls by model Intermediate
Exchange or app custody
Pros
- Simple; password resets and support
- Easy to trade and cash out
Cons
- Counterparty risk: you are a creditor if the firm fails
- Freezes and withdrawal limits are at the firm's discretion
Pitfalls
- Leaving long-term savings on a trading platform
- Assuming crypto has FSCS-style protection; the FCA says it is "highly unlikely" you will be covered (FCA; see UK and USA)
Community advice (labelled: experience shared by users, not official guidance)
- Community advice: if you leave funds on an exchange, use a unique password and app-based two-factor authentication, and test a withdrawal now and then
Solo self-custody (single-signature)
Pros
- No third party can freeze or lose your coins
- Low cost: one device and a metal backup (see price check)
Cons
- One backup is a single point of failure for both loss and theft
- No-one can reset anything for you
Pitfalls
- Never testing a restore
- Keeping the backup and device together
Community advice (labelled: experience shared by users, not official guidance)
- Community advice: test-restore before you send large amounts; see Start here, step 5
Collaborative custody (you hold most keys)
Pros
- Survive losing one key; professional help with inheritance
Cons
- Subscription costs, for example Casa Standard at $250 a year (Casa)
- Some identity data is held by the firm
Pitfalls
- Not keeping your own copy of the wallet descriptor
Community advice (labelled: experience shared by users, not official guidance)
- Community advice: before signing up, ask the provider how you would recover if it disappeared, and keep that answer with your records
Qualified and institutional custodians Expert
For companies, funds, trustees and some very large holders, regulated custodians (e.g. Coinbase Prime, Fidelity Digital Assets, Anchorage Digital, BitGo, Zodia Custody, Komainu) provide segregated custody, audits and reporting.
- UK: check the FCA register for cryptoasset registration status. A new FCA authorisation regime, which covers safeguarding (custody) of cryptoassets, starts on 25 October 2027. The application window runs from 30 September 2026 to 28 February 2027, and existing money-laundering registrations do not convert automatically (FCA: new cryptoasset regime). Until then, registration is not the same as full FCA authorisation or FSCS protection.
- US: look for state trust charters or federal charters; "qualified custodian" has a specific meaning under SEC rules for advisers.
- EU: MiCA-authorised crypto-asset service providers (CASPs) — see EU notes.
- Read the custody agreement for bankruptcy remoteness, insurance limits and what happens on the account holder's death.
What happens if a custodian fails Expert
Three real, sourced examples show why "who legally owns the coins" matters as much as security:
- Celsius (2023). On 4 January 2023 the US Bankruptcy Court for the Southern District of New York ruled that crypto in Celsius "Earn" accounts had become Celsius's property under its terms of use, so it belonged to the bankruptcy estate and account holders were unsecured creditors (opinion (PDF)).
- FTX (2022–2024). The US Department of Justice says Samuel Bankman-Fried misappropriated billions of dollars of FTX customer funds; he was sentenced to 25 years in prison in March 2024 (US Attorney, SDNY).
- Coinbase disclosure (2022). In its quarterly report for the period to 31 March 2022, Coinbase warned that in a bankruptcy, custodially held crypto could be treated as property of the estate and customers could be treated as general unsecured creditors (Form 10-Q). That disclosure followed SEC Staff Accounting Bulletin 121, which the SEC rescinded with SAB 122 in January 2025 (SAB 122). The accounting change does not by itself change who owns the coins; read the custody agreement.
In the UK, the FCA's new cryptoasset regime, which covers safeguarding, starts on 25 October 2027 (FCA). Until then, check exactly what protection a firm claims to offer.
Questions for the custody agreement
- Are my assets segregated and held for me, or do they become the firm's property (as Celsius's terms did for Earn accounts)?
- Can the firm lend, stake or rehypothecate them?
- What happens to my assets if the firm becomes insolvent?
- What insurance applies, to what, and up to what limit?
Safe deposit boxes & private vaults Intermediate
Pros
- Strong physical security off-site
- Good home for one share or key
Cons
- Opening hours, fees
- Access may be frozen on death until probate (England & Wales) / confirmation (Scotland) or a court order (US)
- Many UK high-street banks have withdrawn the service
Pitfalls
- Putting a complete single-sig seed in a box held in your name only
- Not telling executors the box exists
Advice
- Use for a multisig key or SLIP-39 share; seal in a tamper-evident bag; record the bag serial
Solicitors, attorneys, escrow & professional trustees Intermediate
A solicitor (UK) or attorney (US) can hold sealed instructions or a single share as part of your estate plan, act as executor or trustee, or coordinate with a collaborative-custody provider. They should never hold everything needed to spend. Find specialists via STEP, the Law Society (England & Wales), the Law Society of Scotland, or ACTEC (US).
Questions to ask any adviser or service
- Have you handled crypto estates before? How many?
- Will you ever need my seed phrase? (Correct answer: no.)
- What happens if your firm closes or is acquired?
- Are you regulated, and by whom? What insurance applies?
- How do my heirs prove entitlement, and how long does it take?
Primary sources for this page
- Consumer guidance: FTC: cryptocurrency and scams · FCA: crypto investment scams · FCA: new cryptoasset regime
- Failures and disclosures: Celsius Earn opinion (Bankr. S.D.N.Y., 4 January 2023) · DOJ: Bankman-Fried sentenced · Coinbase Form 10-Q, Q1 2022 · SEC SAB 122
- Providers and community advice: Casa pricing · Sparrow best practices · provider links in the table above
- UK and US protection, and moving off an exchange: FSCS: cryptoassets · FSCS eligibility · Report Fraud: crypto · FCA: report a scam · FCA: Travel Rule · FDIC: products not insured · SIPC: what SIPC protects · SEC: crypto asset custody basics (December 2025) · FBI/IC3: SIM swapping (2022) · NCSC: 2-step verification
Listing is not endorsement. Educational information only, not financial or legal advice. Checked 24 October 2026.
Last reviewed: · Educational information only — verify current details with official sources.