Key Takeaways

• Bitcoin custody refers to the control of access to your Bitcoin through private keys. Custody determines who holds the keys and how those keys are protected.
• Self-custody gives you full control but also full responsibility. While it aligns with Bitcoin’s ethos of sovereignty, it introduces significant risks including loss, theft, estate planning challenges, and physical vulnerability.
• Third-party custody offers convenience but introduces centralized risk. Delegating key management to a custodian can simplify access and enable financial services, but it creates exposure to downtime, regulatory seizure, internal failures, or hacks.
• Multisig adds resilience through distributed control. By requiring multiple approvals to move Bitcoin, multisignature setups eliminate single points of failure. However, most implementations today can be complex for individuals or still rely on a single organization.
• Multi-Institution Custody solves these tradeoffs by distributing keys across three independent custodians, requiring two-of-three approval for access, and ensuring that no single institution can cause a loss.

Bitcoin custody is about protecting the keys that control your wealth. Unlike traditional assets, which always rely on custodians, trust companies, and financial intermediaries, Bitcoin gives investors the power and responsibility to hold their own money. But with that power comes risk and tradeoffs. How you choose to custody your Bitcoin determines how secure, accessible, and resilient your holdings really are.

At Onramp, we help investors navigate and secure Bitcoin for the long term, and custody is a crucial part of that. Whether you're securing a personal allocation or managing assets for your business or on behalf of others, here’s what you need to know about Bitcoin custody.

What Does Custody Mean in Bitcoin?

In traditional finance, custody refers to a third party, typically a bank or trust company, that holds assets on behalf of a client. You maintain legal ownership, but the custodian manages the record-keeping of the asset.

With Bitcoin, things work differently. Bitcoin is a bearer instrument. Whoever controls the private key has control of the asset. Unlike traditional custody, which primarily involves record-keeping, Bitcoin custody involves safeguarding the asset itself. If a Bitcoin custodian is compromised, the Bitcoin can be irreversibly lost.

Compare this to owning shares of a public company. If records are misplaced or mismanaged, the company still exists and the shares can typically be recovered. That’s not the case with Bitcoin. This is why custody is one of the most important decisions any Bitcoin investor will make.

At its core, custody means: Who manages the private keys? And what systems, redundancies, and safeguards are in place to protect them?

Self-Custody: Sovereignty with Responsibility

Self-custody means you control the private keys to your Bitcoin. It’s the purest expression of financial sovereignty. You don’t rely on an intermediary, and you can send or receive Bitcoin at any time, from anywhere.

But self-custody comes with tradeoffs:

• You are solely responsible for your security
• There’s no recourse if you lose your keys
• Estate planning can become complex and challenging for your heirs
• Malicious actors can target self-custody users
• Natural disasters or other unforeseen risks could compromise your custody setup

Despite these challenges, many Bitcoiners value self-custody as a core principle: “Not your keys, not your coins.”

Want to learn more about the historical precedent of Not Your Keys, Not Your Coins? Read here.

Third-Party Custody: Convenience and Risk

Third-party custody offers a familiar model: delegate key management to a professional custodian. This can be helpful if you’re not confident managing private keys, want institutional-grade infrastructure, or need integrated services like inheritance, insurance, lending, trading, or reporting.

The best custodians use cold storage, air-gapped infrastructure, and multi-signature architecture. But not all custody solutions are created equal. Risks of third-party custody include:

• Centralized points of failure
• Regulatory exposure or seizure risk
• Downtime or access delays
• Lack of transparency into how keys are stored

Bitcoin is unforgiving. A hack, breach, or operational failure at the custodian level can mean permanent loss.

Multisig: A Better Way to Custody Bitcoin

Multisignature, or multisig, is a method of securing Bitcoin by requiring multiple approvals before funds can be moved. It was one of the first major breakthroughs in Bitcoin security, helping reduce single points of failure.

Instead of one key unlocking the Bitcoin, a multisig address requires multiple signatures, like 2-of-3 or 3-of-5, to authorize a transaction. This adds redundancy and drastically reduces the risk of loss or theft by eliminating single points of failure.

However, most multisig implementations to date fall into two categories:

• Consumer-grade multisig, where an individual manages several private keys. This adds redundancy but also increases complexity.
• Institutional multisig, where a single custodian uses multiple keys internally. While this enhances infrastructure-level security, it still relies on the operational controls and attack surface of one organization.

Want to learn more about multisig? Learn more here.

Onramp’s Approach: Multi-Institution Custody

At Onramp, we’ve pioneered the next evolution of multisig, built for the real-world needs of today’s Bitcoin investor. We designed this custody model after helping thousands of clients and onboarding billions in Bitcoin. We call it Multi-Institution Custody.

Here’s how it works:

• Three independent custodians or trust companies each hold one key, and any two of the three are required to access the Bitcoin
• No single institution can be compromised, hacked, or fail in a way that results in loss to the client
• Onramp clients retain full legal ownership and control of their Bitcoin
• Transactions require quorum approval, eliminating single points of failure
• Assets are visible and auditable on-chain, 24/7
• Insurance coverage underwritten by Lloyd’s of London
• Seamless access to financial services, including inheritance, lending, and IRAs

It delivers greater security with less friction. No seed phrases to memorize. No technical setup. No reliance on a single custodian. You stay in control with peace of mind.

Want to learn more about Multi-Institution Custody?

Why Custody Matters More as Bitcoin Grows

As Bitcoin evolves from a niche experiment into a widely adopted savings technology, custody becomes mission-critical. Over the past decade, we’ve seen exchanges go bankrupt, suffer hacks, or even steal client funds.

We've also seen an estimated 20% of all Bitcoin become permanently lost, much of it through mismanaged self-custody.

As Bitcoin appreciates and represents a growing share of personal net worth or business treasury, the stakes rise. Individuals and institutions alike need more resilient, redundant, and secure ways to protect their holdings.

Whether you're an individual with a material allocation, a fiduciary managing client assets, or a business balancing operational priorities, Bitcoin custody is no longer just a security decision. It’s a strategic one.

Learn more about our multi-institution custody solutions. → https://www.onrampbitcoin.com/products/multi-institution-custody

Our team is here to support you in your decision-making process. We’ve guided thousands of clients and can help you make the right decision for your circumstances - book a consultation.