As inflation concerns persist and negative interest rates loom, even the most conservative institutional investors—such as corporate treasurers—are exploring digital assets for surplus cash management. According to Gartner, 5% of CFOs and senior financial executives plan to add Bitcoin to their balance sheets in 2025. However, the existing digital asset infrastructure often falls short in delivering the security, liquidity, and financial tooling required for enterprise-grade operations.
Most custody solutions still struggle with balancing fund safety and operational efficiency. Enterprises holding crypto typically rely on a mix of hot and cold wallets, which introduces significant operational risks and complicates financial reporting. Teams often spend hours aggregating data from disparate sources just to gain visibility into their holdings.
To address these challenges, institutional cryptocurrency custody is generally approached through three models: self-custody, co-custody, and third-party custody.
Self-Custody: Full Control Over Digital Assets
Self-custody aligns with Satoshi Nakamoto’s vision of financial sovereignty—“be your own bank.” Unlike regulated institutions bound by custody rules requiring qualified custodians, corporate treasurers can retain full control by managing private keys themselves.
Think of it as storing gold in a private vault. With cryptocurrencies, control is exercised through private keys—cryptographic codes that prove ownership.
Single-Signature Wallets
Small businesses may use single-signature hardware wallets, storing private keys on secure USB-like devices for convenient transaction signing.
Pros:
- Full autonomy over assets
- Fast transaction execution by authorized individuals (e.g., CEO or CFO)
Cons:
- Not scalable for larger organizations—relying on one individual creates a single point of failure
- Risk of loss due to death, theft, or hacking
- No accountability when multiple staff share access
Multi-Signature (Multi-Sig) Wallets
To mitigate risks, most enterprises adopt multi-signature wallets. If a single key is like one vault key, multi-sig is like a safe requiring multiple keys (M out of N) to open.
For example, a 3-of-5 setup requires three approvals from five designated signers before a transaction clears.
Pros:
- Supports role-based permissions and multi-step approvals
- Reduces risk of unilateral misuse
Cons:
- More signatures mean slower, costlier transactions due to on-chain confirmation delays
- Limited scalability—most solutions support up to 15 signers
- Changes in policy require migrating funds to a new address
- On-chain visibility exposes signature patterns to potential attackers
Co-Custody: Shared Control with External Parties
Co-custody involves sharing control with a third party acting as a backup or active co-signer. This can be implemented via multi-sig or more advanced Threshold Signature Schemes (TSS) using Multi-Party Computation (MPC).
On-Chain Co-Custody with Multi-Sig
A company holds two of three private keys, while the third is held by a trusted service provider.
Pros:
- Distributes key management burden
- Reduces single-point failure risk
Cons:
- Inherits all limitations of multi-sig
- Introduces trust dependency on third parties
Off-Chain Co-Custody with MPC-TSS
“I believe TSS will reshape the landscape of wallets and custody services. It’s far superior to multi-sig.” — CZ, Binance
MPC-TSS moves the signing process off-chain. Instead of multiple on-chain signatures, a single ECDSA signature is generated across distributed nodes, each holding a fragment of the private key.
Pros:
- Faster transaction signing without blockchain congestion
- No network fees for signature generation
- Cross-chain compatibility via standardized ECDSA (supports ~95% of blockchains)
- Enhanced privacy—signing workflows aren’t exposed on public ledgers
Cons:
- Centralized MPC implementations are vulnerable (e.g., Intel SGX breaches)
- Risk of insider collusion if all nodes are controlled by one entity
- Lack of transparent audit logs for compliance
Third-Party Custody: Entrusting Assets to External Providers
This model resembles depositing gold in an insured vault. Assets are held by a third party, often using multi-sig wallets under their control.
“We should avoid at all costs any crypto wallet that doesn’t give you the private keys.” — Elon Musk
Pros:
- No technical expertise required
- Simplified user experience
Cons:
- Counterparty risk—providers can freeze or lose access
- Assets may be commingled in pooled accounts, reducing transparency
- High fees and slow withdrawal processes (often taking days)
- Growing list of bankrupt custodians (e.g., QuadrigaCX)
Qredo Network: Decentralized Custody for Decentralized Assets
Qredo introduces a new paradigm—decentralized custody for decentralized assets—using MPC technology across a dedicated blockchain network.
It enables enterprises to blend self-, co-, and third-party custody models without compromising security or accessibility.
Key Features:
Instant Transaction Settlement
Enable real-time asset coordination across custodians, brokers, and institutions—critical in volatile markets.
Unified Dashboard
Gain full visibility across all wallets—corporate, regional, subsidiary—with real-time balances and transaction tracking.
Fiat Treasury Integration
Connect directly to existing financial systems via REST APIs on open-source infrastructure.
Flexible Approval Workflows
Customize roles for initiators, approvers, and auditors. Support unlimited signers with arbitrary M-of-N threshold schemes.
Immutable Audit Logs
All transactions are recorded on Layer 2 blockchain, providing tamper-proof records for compliance and internal audits.
Regulatory Compliance Support
Built-in messaging allows attachment of sender/receiver identities, facilitating adherence to regulations like the Travel Rule.
Seven-Layer Security Framework
Defense-in-depth model includes:
- MPC with distributed key shards
- Decentralized node network
- Hardware security modules (HSMs)
- Lloyd’s of London insurance coverage
- Zero-knowledge proof verification
- Real-time anomaly detection
- Governance-controlled recovery protocols
Frequently Asked Questions (FAQ)
Q: What is the safest form of crypto custody for enterprises?
A: A hybrid model combining MPC-based co-custody with decentralized infrastructure offers optimal security and control without single points of failure.
Q: Can I maintain compliance with financial regulations using self-custody?
A: Yes—if your solution supports immutable audit trails, role-based access, and identity integration for reporting and Travel Rule compliance.
Q: How does MPC differ from multi-sig?
A: Multi-sig requires multiple on-chain signatures visible to all; MPC generates one signature off-chain using distributed key fragments, enhancing speed, privacy, and cross-chain usability.
Q: Is third-party custody obsolete?
A: Not entirely—but modern institutions prefer solutions where they retain cryptographic control while leveraging third-party services for operational support.
Q: Why is decentralized custody important?
A: Because centralized points—whether in key management or node control—remain prime targets for hackers and insider threats.
Q: Can custody solutions integrate with existing ERP systems?
A: Yes—via API-first platforms like Qredo that enable seamless connection to SAP, Oracle, or custom treasury management systems.
👉 Explore enterprise-grade custody solutions that combine security, speed, and regulatory readiness.
By leveraging advanced cryptographic frameworks like MPC-TSS and decentralized networks, institutional investors can now achieve true digital asset sovereignty—securely, efficiently, and at scale.