12 Best Crypto Custodial Wallets
The intent of holding cryptocurrency as a virtual asset gives rise to an important question…Where do I store my crypto assets?
No investor wants to risk losing his/her crypto holdings to cyberthieves. Here is an article on how to recover your stolen crypto from cybercriminals.
Hard or cold wallets are often recommended to hold your digital assets’ long-term because they are built with high resistance security chips, they also can work with multiple blockchains, and your coins are stored offline.
But not all investors are ready to invest in hard wallets. If you are a beginner investor and hold a relatively smaller asset, custodial wallets (which are also known as hot wallets) will do just fine until you’re ready to invest in a hardware wallet such as the Ledger Nano X.
In this article, I will explain how the custodial wallet works and highlight the best crypto custodial wallets to consider.
Key Takeaways
• Custodial wallets are ideal for beginner investors with smaller crypto holdings.
• The reputation and safety of a custodial wallet is as good as its provider.
• Private keys for custodial wallets are stored by a third-party provider.
• Most custodial wallets are free to use with the protection of users’ privacy.
SEE ALSO: 9 Best Multicoin Wallets for Hodling Crypto
SEE ALSO: Are Multi-sig Wallets Truly Safe?
SEE ALSO: How to Backup Your Hardware Wallet – Best Practices
What are Custodial Wallets?
A Custodial Wallets are digital wallets provided by a crypto exchange for its users to trade and hold coins & tokens. For instance, crypto exchanges like Coinbase, Binance, Paxful, and many others offer custodial wallets to facilitate transactions for their users.
Third-party wallet providers that are not crypto exchanges also provide digital wallet services. For example, MetaMask, WalletConnect, Fortmatic wallets are exclusively wallet solution providers.
See MetaMask Vs WalletConnect Comparison.
It’s also worthy of note that most crypto exchanges can also integrate or support other custodial wallets and hardware wallets. For instance, the MetaMask, Ledger, Trezor can be linked to your Coinbase or Binance account even if you already have a custodial wallet with these exchanges.
In terms of security, the private key is what proves ownership and gives a user access to the funds in their wallet. That is to say, access and control of a custodial wallet are in the hands of the trusted third party and the same is treated with the utmost confidentiality.
Let’s see these custodial wallets
1. Binance
Binance is a top crypto exchange popular for crypto to crypto trading services. Over 500 different cryptocurrencies can be traded on the platform.
Binance imposes strict sign-in protocols to ensure the safety of user assets. two-factor authentication and Advanced access control security features including IP whitelisting.
2. Bitfinex
Bitfinex is a popular cryptocurrency exchange operating globally. They offer very low fees on transactions on the platform, which makes them stand out. As with every other crypto exchange, Bitfinex runs a custodial wallet service for its users. Supports Over 170 cryptocurrencies.
With a shaky security hack history, Bitfinex utilizes several industry-standard methods like cold storage and withdrawal protection features to ensure the safety of user accounts and assets within them.
3. Coinbase
Coinbase is a very popular cryptocurrency exchange for trading crypto easily. A hub for easily purchasing or selling any cryptocurrency. There is a non-custodial wallet service via the Coinbase Wallet app.
However, on the exchange platform, Coinbase runs a Custodial wallet service for easy movement of funds while trading. They remain one of the exchanges that have not been hacked.
User access to funds is protected by 2-factor authentication and bank standard encryption on the platform. Coinbase also stores 98% of user assets offline in cold storage in safe locations.
4. TrustVault
TrustVault is a custodial wallet service providing service by Trustology for the safekeeping of crypto assets for individuals and businesses. Funds are well protected from unauthorized access by the use of 2 Factor Authentication And Multi-signature.
TrustVault functions more like a hardware wallet and not an exchange platform. Partnership with MoonPay and other exchanges like Coinbase, Kraken, Valr, Luno, Tagomi, and BitMex for buying or selling cryptocurrencies.
TrustVault offers 2 custodial wallet service options.
- On-chain
- On-exchange
5. Poloniex
Poloniex is another cryptocurrency exchange with a good service of low fees. Not available in the U.S, it supports over 350 cryptocurrencies for trading on the exchange platform, all of which can be kept secured in their custodial wallets.
Poloniex also has a mobile app available for download on iOS and Android platforms, for users to easily and securely view, manage and trade crypto assets.
6. Kraken
Kraken is a US-based crypto exchange for trading crypto and fiat currencies. Kraken offers safekeeping of clients’ assets in Custodial exchange wallets utilizing 2-factor Authentication and encryption of user data for security. 95% of funds are stored offline in cold wallets spread across locations under continuous security surveillance.
7. BitMex
BitMEX doubles as a trading platform and a cryptocurrency exchange. It supports buying and selling of 18 digital currencies and tokens for Crypto to crypto trading on its platform.
On custodial security, BitMEX utilizes multi-signature and the safety of cold storage for holding user assets. It also deploys a multi-party computation (MPC) system for added security against hackers.
8. Bitgo
Bitgo is a Custodial wallet platform for securing and moving digital assets safely. They focus primarily on wallet accessibility and security. With multi-signature security and other security configuration, you can move funds easily and securely.
BitGo offers two Cryptocurrency Wallet Pricing:
- BitGo Business Wallet
- BitGo Pay As You Go
9. Blockchain.com
Blockchain.com is a financial service company offering cryptocurrency services. Created in 2011 as an explorer for the Bitcoin blockchain. Blockchain.com offers cryptocurrency wallet and trading services and has accounted for 28% of bitcoin transactions. There is a Private Key wallet and Trading Account wallet.
Blockchain offers a Custodial Trading Account wallet linked to your account on the platform. This provides faster transactions at lower fees since everything is done off-Chain. Security is of good reputation.
10. Freewallet
Freewallet is a crypto wallet service provider. You can hold over 30 different cryptocurrencies on the wallet app. It comes with a Built-in exchange for over 100 different cryptocurrencies. Transactions between Freewallet users are free and faster. They have a reputation for saving users a lot of transaction fees.
It is secured with 2 Factor authentication and Multi-signature confirmation for each transaction. Support for fingerprints is also available. Funds are held offline in cold storage.
11. BTC.com
Created by Blocktrail, BTC.com is a web wallet by Bitmain Technologies that offers custodial wallet service, blockchain explorer, and mining pool services. Dealing exclusively with Bitcoin, it connects directly to the Bitcoin network.
BTC.com is looking to officially stop Wallet services on April 1, 2022.
12. Bithumb
Bithumb is a Korean crypto exchange. With support for just 10 cryptocurrencies, it still racks up a large trading volume daily. To stop the 2017 hack from happening again, it runs a secured platform.
Frequently Asked Questions (FAQs)
Q1. Which is the safest crypto wallet?
The safest type of crypto wallet is a hardware wallet. Ledger Nano and Trezor are examples. Custodial wallet providers store a large percentage of user funds on cold wallets.
Q2. Is Coinbase a non-custodial wallet?
Coinbase Wallet is a user-controlled, non-custodial wallet with a 12-word recovery phrase. The web platform does however offer a custodial wallet service used for holding funds used in trading.
Custodial wallets are well secured but are still susceptible to attacks. The losses are usually massive when it happens. Many people have lost their assets via phishing attacks too.
It is advisable to split usage between custodial and noncustodial custodial wallets. Make a pick from our list of the best crypto multi-coin wallets.
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