Storing Crypto Safely: Custody for Larger Holdings Explained

For anyone building a substantial position in digital assets, attention shifts quickly from the purchase to the safekeeping. Storing crypto is not a secondary matter but the core of the risk. Unlike a bank balance, there is no institution that administers the holding or reverses a transaction when something goes wrong. Whoever has access to the keys has, in practice, access to the wealth.

With modest amounts this remains manageable. As positions grow larger, however, the question of how to store crypto safely becomes decisive. One lost password, one successful breach or one human error can be irreversible. The considerations are set out below.

Whoever controls the keys controls the holding

Ownership of crypto comes down to control over the private keys. Those keys give access to the positions on the blockchain and form the only proof of control. A crypto wallet stores these keys, but the blockchain itself has no central register that records or restores ownership. If a key is lost or falls into the wrong hands, the position is as a rule permanently lost. Key management is therefore the real question of safekeeping.

Reachable online or protected offline

Storage solutions differ above all in their connection to the internet. With hot storage the keys reside on a device that is online, which enables fast transactions but increases exposure to attacks. With cold storage the keys are kept offline, for instance on hardware without a permanent internet connection. The essence of any explanation of cold storage is simple: less reachability means less attack surface. Convenience decreases, resilience increases. For that reason larger positions are usually held predominantly offline.

Self-custody or a qualified custodian

Broadly speaking there are two routes. With self-custody you keep the keys entirely under your own control, with maximum oversight but also the full operational burden. Loss, theft and mistakes are then entirely for your own account. Self-custody with a hardware wallet, such as a Ledger or a Trezor, also asks for a one-off purchase rather than an ongoing fee, which makes it the cheapest of the options; the flip side is that backup, recovery and succession rest entirely with you. The alternative is professional or institutional crypto custody, in which a specialised party manages the keys according to strict procedures. For larger positions that procedural soundness weighs heavily, because a single point of failure has major consequences here. In practice there is a third variant, and it is the most common one: leaving balances on a crypto exchange. That is not a custody solution but a trading platform, and you carry the counterparty risk of that platform.

Among crypto users there is a standing phrase for this: not your keys, not your coins. Whoever does not hold the keys owns no coins but a claim on a company. FTX showed how that plays out. The exchange filed for bankruptcy on 11 November 2022 after it emerged that customer money had been moved to an affiliated company. The first distributions followed only in February 2025, more than two years later, and were calculated at November 2022 prices. Anyone holding bitcoin on the exchange therefore did not get bitcoin back, but an amount reflecting its value at the low point.

Since 30 December 2024, providers of crypto-asset services in the EU have been subject to the rules of the Regulation on markets in crypto-assets (Regulation (EU) 2023/1114, MiCA). An authorised provider that carries out custody and administration must, under Article 75, keep clients’ holdings segregated from its own, maintain a custody policy and keep a register of positions. It is moreover liable for the loss of the assets or the means of access that is attributable to it. In the Netherlands the AFM supervises these authorisations.

Who holds the assets in law

At Callisto Capital the digital assets are held by a foundation that is their legal owner, separate from the manager’s own assets. Safekeeping itself is placed with professional parties.

Callisto Capital is a Dutch fund for joint account; its manager is registered with the AFM under the AIFMD-light regime and is not subject to ongoing supervision. Participation is open from an investment of 100,000 euro. This article is for information only and does not constitute investment advice.