How Institutions Store Billions in Bitcoin Safely

Institutional adoption of Bitcoin has grown at a pace few expected. Exchange-traded funds have unlocked billions in inflows. Hedge funds and asset managers are allocating strategically. Corporations like Strategy and Tesla have placed Bitcoin on their balance sheets, signaling a new era where BTC is no longer a fringe asset but a component of global finance.

Yet behind every major allocation lies a fundamental challenge: where and how do you safely store Bitcoin?

Bitcoin is not like equities or bonds, where clearinghouses and custodians have been entrenched for decades. It is a bearer asset: whoever controls the private keys controls the coins. That makes secure custody the single most important factor in institutional adoption. Without it, the risks of theft, loss, or mismanagement are too great for fiduciaries to bear.

This reality has given rise to competition among providers and models to become the gold standard for securing digital assets. On one side are cold storage specialists like BitGo, offering vault-like security for long-term holdings. On the other are newer players like Fireblocks, whose multi-party computation (MPC) technology powers more active use cases. Together, they represent the evolving landscape of institutional Bitcoin custody.

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Bitcoin custody isn’t just about safeguarding digital assets, it's about building the foundation of trust that enables institutional capital to enter the market.

• Security at scale: Bitcoin transactions are irreversible. A lost or stolen private key means funds are gone permanently. Custody must mitigate hacking risks, insider threats, and operational failures.
  
  
• Regulatory compliance: Regulators demand that institutions separate client assets, maintain proper record-keeping, and meet fiduciary standards. Custodianship makes this possible.
  
  
• Insurance & auditability: Institutions require not only secure infrastructure but also insurance coverage against theft or loss, and third-party audits to verify practices.
  
  
• Operational efficiency: Large asset managers and exchanges can’t run on USB sticks or consumer wallets. They need custody solutions that scale with billions in assets under management.
  
  

In short, custody is what bridges Bitcoin’s technical reality with the governance, compliance, and trust requirements of institutional finance. Without it, ETFs wouldn’t exist, corporates couldn’t hold BTC on balance sheets, and exchanges like Netcoins couldn’t safeguard client assets.

The Institutional Custody Landscape

The custody industry has split into two dominant models, each with distinct strengths:

Cold Storage Custodians

Cold storage refers to keeping private keys completely offline air-gapped from the internet and secured in vault-like environments. Keys are generated in highly controlled facilities, often requiring multiple human authorizations for access. Movement of funds can take longer but the trade-off is unparalleled security.

• Pros: Maximum protection against hacking, strong insurance policies, robust regulatory recognition.
  
  
• Cons: Limited flexibility; ill-suited for high-frequency trading or active strategies.

Cold storage is effectively the “digital vault” of Bitcoin ideal for reserves, ETFs, and corporate treasuries where the priority is security over speed.

MPC & Active Custody Solutions

Multi-party computation (MPC) takes a different approach. Instead of holding a single private key, MPC divides it into multiple encrypted fragments, stored across independent parties or devices. No one fragment can authorize a transaction alone, and they must coordinate to sign transfers securely.

• Pros: Enables faster, programmable access while maintaining security; excellent for funds, market makers, and exchanges.
  
  
• Cons: More complex to implement; insurance coverage varies by provider.
  
  

This model appeals to institutions that need assets to move quickly across counterparties and trading venues without compromising institutional-grade protection.

BitGo: The Pioneer of Institutional Custody

Among custodians, BitGo has become synonymous with Bitcoin cold storage. Founded in 2013, BitGo was one of the first companies to recognize that institutional adoption would hinge on regulated, insured, and auditable custody solutions.

• Regulation: BitGo Trust Company operates as a qualified custodian in the U.S., meaning it is licensed and regulated under banking-like standards. This status makes it attractive for institutional clients who need clear fiduciary oversight.
  
  
• Insurance: BitGo offers insurance policies covering theft or loss, helping institutions meet compliance requirements and reassuring investors.
  
  
• Track record: With over a decade in the industry, BitGo has safeguarded billions in digital assets for exchanges, corporate treasuries, and funds worldwide.
  
  
• Technology: Beyond offline cold wallets, BitGo provides multi-signature security and integrates compliance tools like transaction monitoring.
  
  

BitGo represents the “vault” model of custody providing ultra-secure, deeply regulated solutions trusted by some of the largest players in the digital asset space. For ETFs, long-term treasuries, and exchanges like Netcoins, BitGo’s role as a cold storage provider remains indispensable. You can listen into how BitGo plays a critical role for Netcoin's custody needs from our CEO Fraser Mathews here

‍Fireblocks: Infrastructure for Active Institutions

While BitGo built its reputation as a pioneer of cold storage, Fireblocks represents a new wave of custody solutions designed for speed, connectivity, and scale. Founded in 2018, Fireblocks has quickly become one of the most widely adopted custody and settlement infrastructures among banks, asset managers, exchanges, and fintechs.

At the heart of Fireblocks approach is multi-party computation (MPC). Fireblocks break keys into encrypted fragments distributed across different environments. No single device or administrator can authorize a transfer, eliminating single points of failure.

But Fireblocks goes beyond security:

• Network connectivity: Fireblocks offers direct, secure access to more than 1,800 institutions, including trading venues, OTC desks, and liquidity providers. This makes it far easier for asset managers to deploy Bitcoin into active strategies without moving funds across insecure channels.
  
  
• Operational efficiency: MPC allows transactions to be signed and broadcast quickly, enabling clients to move assets at institutional speeds critical for trading, lending, or staking operations.
  
  
• Risk controls: Fireblocks provides policy engines for institutions to set granular rules (e.g., daily transfer limits, multi-approvals, counterparty whitelists).
  
  

In short, Fireblocks represents the “networked” custody model providing secure infrastructure that enables active participation in crypto markets while maintaining institutional-grade risk management.

Custody Solutions Vary By Use Case 

BitGo and Fireblocks embody two different philosophies of custody, but in practice, many institutions now use both models in tandem.

• Cold storage: For reserves, ETFs, and long-term holdings, where security and insurance coverage are paramount.
  
  
• MPC custody: For active portfolios, where liquidity, settlement, and speed are equally critical.

This dual approach reflects the reality of institutional adoption: Bitcoin is no longer just an investment to lock away in a vault, it’s an asset class institutions increasingly need to move and manage actively.

Other dynamics shaping the custody wars include:

• Regulation: Jurisdictions like the U.S., Canada, and EU are defining clearer rules for qualified custodians, forcing providers to differentiate on compliance.
  
  
• Insurance & transparency: Providers compete on the scope of their insurance coverage and the depth of third-party audits.
  
  
• Integration: Custody is being embedded into ETF structures, banks, and fintechs, making it a core piece of mainstream financial infrastructure.
  
  

Custody is less about whether cold storage or MPC will win outright and more about which providers can deliver both security and flexibility in ways that satisfy regulators, institutions, and investor needs.

What’s Next for Institutional Custody

As Bitcoin matures, custody will remain the foundation on which adoption rests. The next phase will likely include:

• Consolidation: Expect a smaller number of dominant custody providers serving the bulk of institutional flows.
  
  
• Expansion beyond Bitcoin: Custody providers are already preparing for tokenized securities, stablecoins, and CBDCs, positioning themselves as infrastructure for digital assets more broadly.
  
  
• Deeper integration with TradFi: Custody services are increasingly embedded into banks, broker-dealers, and ETFs, reducing the distinction between crypto-native and traditional custody.
  
  
• Standardization: As regulators impose stricter requirements, reporting, insurance, and audit standards will converge, raising the industry baseline.
  
  

The custody wars are far from over but one thing is certain: without trusted custody, institutional Bitcoin cannot scale. Custody has quietly become the most important battleground in institutional crypto. Providers like BitGo and Fireblocks represent two leading models, one prioritizing cold storage and insurance, the other enabling secure, active participation in global markets. Together, they illustrate how far custody has come in just a decade and how central it will remain as Bitcoin moves deeper into the institutional mainstream.