Custody
Secure storage and management of digital assets by qualified third-party institutions, ensuring protection against theft and unauthorized access.
What is Custody?
Custody refers to the secure storage and management of digital assets by qualified third-party institutions, ensuring protection against theft, loss, or unauthorized access while complying with regulatory standards. For Bitcoin ETFs, custody is a critical component, where specialized custodians like Coinbase Custody (serving over 80% of issuers) hold the underlying Bitcoin reserves, enabling investors to gain exposure through regulated exchange-traded products without direct ownership. Custody providers facilitate ETF operations by safeguarding assets for issuers like BlackRock’s IBIT, which holds over $90 billion in Bitcoin as of 2025.
Institutional-grade custody involves segregated wallets, multi-signature protocols, cold storage, and regular audits. As demonstrated in partnerships like U.S. Bank’s 2025 resumption of Bitcoin custody services, where NYDIG serves as sub-custodian, supporting both direct holdings and ETF administration. This infrastructure bridges traditional finance and crypto, managing trillions in assets while mitigating risks.
Related Terms
Maintenance Margin
The minimum collateral required to keep a leveraged position open.
Herd Behavior/Bandwagon Effect
The tendency of prediction market participants to follow prominent public signals, potentially distorting prices.
Impermanent Loss Amplification
The heightened risk of value loss for liquidity providers when using concentrated positions, exacerbated by price movements outside specified ranges.
Information Aggregation
The process of collecting and combining dispersed information from multiple sources to produce a more accurate collective prediction.
Hyperliquid
A high-performance Layer-1 blockchain and decentralized exchange (DEX) optimized for perpetual futures trading of digital assets with on-chain order books.
IOSCO Stablecoin Rules
International Organization of Securities Commissions' Standards applying securities regulations to stablecoins for investor protection and market integrity.