The U.S. Securities and Exchange Commission (SEC) recently issued an Investor Bulletin, "Crypto Asset Custody Basics for Retail Investors," to educate the market on the critical importance of secure custody. The SEC highlights two primary custody options—self-custody and third-party custody—while urging investors to conduct deep due diligence on their providers and storage methods (hot vs. cold wallets).

We believe the core message from the SEC is clear: You must choose security, and you must understand the risks of your chosen custody model.

BitGo Offers Self-Custody and Third-Party Options for Custom Risk Profiles

In response to the SEC’s framework, BitGo’s CEO affirmed (via X/Twitter) that BitGo delivers an industry-leading, institutional-grade platform for the full spectrum of options. BitGo allows clients to “mix-and-match” these options to create a custom risk profile that no other provider can support.

Addressing the SEC’s Primary Models

The SEC defines two primary models for custody. Most providers force you to choose one; BitGo allows you to utilize both simultaneously within a single dashboard.

SEC Definition

BitGo Solution: Third-Party Custody (Option A)

BitGo Solution: Self-Custody (Option B)

Entrusting assets to a separate entity. You rely on their security, regulation, and insurance. (The "qualified custodian")

BitGo Bank & Trust, NA: A fully regulated, qualified custodian. We generate and secure keys in bank-grade, offline vaults. Best for: The majority of your "buy-and-hold" assets.

Self-Custody Wallets (2-of-3 multi-sig or MPC 2-of-3 threshold).

You hold the private keys. You have full control and responsibility (hot & cold).

How it works: You hold two keys (client + backup). BitGo holds one key (for co-signing). BitGo cannot move funds without you, but we can enforce policy controls. Best for: Operational capital (hot) or assets you want to control directly (cold).

The "Mix-and-Match" Strategy (Deep Cold + Real-Time)

Because BitGo builds all these options into a single dashboard, you can engineer a risk profile impossible to achieve with disjointed providers. This hybrid model allows you to:

  • Place 90% in Third-Party Cold Storage (BitGo Bank and Trust, N.A.): Meets the highest standard of regulatory compliance, insurance, and safety.

  • Keep 10% in Self-Custody Hot Wallets: Distinct from the Trust, this float allows for instant, real-time transaction capability.

The Result: You eliminate the single point of failure AND protect against loss through diversified custody models all in one interface.

Answering the SEC’s 7 Key Questions: The BitGo Answer Key

The SEC bulletin lists seven essential questions investors must ask a third-party custodian. BitGo’s platform is uniquely positioned to answer all of them with institutional-grade assurance:

SEC Question

The BitGo Answer

Q1: "Have you researched the custodian’s background?"

A: Yes. BitGo Bank & Trust, NA is a regulated fiduciary as a federally chartered OCC national bank. We are subject to rigorous oversight, capitalization requirements, and regular SOC 1 Type 2 and SOC 2 Type 2 audits.

Q2: "What types of crypto assets does the custodian allow me to hold?"

A: We support 1,550+ digital assets—among the most comprehensive offerings in the industry . You can consolidate your portfolio under one roof rather than fragmenting it.

Q3: "What happens if the custodian fails?"

A: Bankruptcy Remote. BitGo uses segregated accounts. Client assets are never commingled with corporate funds. Even in insolvency, your assets are legally yours. Plus, we maintain insurance coverage up to $250M for assets held in qualified custody through Lloyd's of London syndicates.

Q4: "Where and how does the custodian store your assets?"

A: Deep Cold Storage. Keys are generated and stored offline in air-gapped environments within bank-grade Class III vaults. All wallets utilize 2-of-3 Multi-Sig or MPC threshold security to eliminate single points of failure.

Q5: "How does the third-party custodian use your crypto assets?"

A: We don’t. BitGo Bank & Trust does not lend out your assets or rehypothecate them. Assets are held on a strict 1:1 basis.

Q6: "What privacy protections does the custodian provide?"

A: Institutional-grade privacy. As a regulated trust company, we adhere to strict standards verified by SOC 2 Type 2 controls. We never sell customer data.

Q7: "What account fees does the custodian charge?"

A: Transparent, tiered pricing. Because we do not lend your assets to generate backend revenue, our business model relies on clear service fees, aligning our incentives with the safety of your funds.

Conclusion: Choose Both Security and Control.

By offering the full spectrum of options described by the SEC, BitGo allows institutions to stop choosing between security and control—and instead choose both.

BitGo Bank & Trust for qualified custody.

BitGo Wallets for self-custody sovereignty.

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About BitGo

BitGo is the digital asset infrastructure company, delivering custody, wallets, staking, trading, financing, and settlement services from regulated cold storage. Since our founding in 2013, we have been focused on accelerating the transition of the financial system to a digital asset economy. With a global presence and multiple regulated entities, BitGo serves thousands of institutions, including many of the industry's top brands, exchanges, and platforms, and millions of retail investors worldwide. For more information, visit www.bitgo.com.

©2025 BitGo, Inc. (collectively with its parent, affiliates, and subsidiaries, “BitGo”). All rights reserved. BitGo Bank & Trust, National Association (“BitGo Bank & Trust”) is a national trust bank chartered and regulated by the Office of the Comptroller of the Currency (OCC). BitGo Bank & Trust is a wholly-owned subsidiary of BitGo Holdings, Inc., a Delaware corporation headquartered in Palo Alto, California. Other BitGo entities include BitGo, Inc. and BitGo Prime LLC, each of which is a separately operated affiliate of BitGo Bank & Trust.

BitGo does not offer legal, tax, accounting, or investment advisory services. The information contained herein is for informational and marketing purposes only and should not be construed as legal, tax, or investment advice. You should consult with your own legal, tax, and investment advisor for questions about your specific circumstances.

Digital assets are subject to a high degree of risk, including the possible loss of the entire principal amount invested. Past performance and illustrative examples do not guarantee future results. The value of digital assets can fluctuate significantly and may become worthless. No BitGo communication is intended to imply that any digital asset services are low-risk or risk-free. BitGo is not a registered broker-dealer and is not a member of the Securities Investor Protection Corporation (“SIPC”) or the Financial Industry Regulatory Authority (“FINRA”). Digital assets held in custody are not guaranteed by BitGo and are not subject to the insurance protections of the Federal Deposit Insurance Corporation (“FDIC”) or SIPC. Custody and other digital asset services are subject to eligibility, jurisdictional, and regulatory restrictions. Availability of specific products and services may vary by location and entity.

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BitGo makes no representation that the information contained herein is appropriate for use in any jurisdiction where its distribution or use would be contrary to law or regulation or would subject BitGo or any of its affiliates to any registration or licensing requirements in such jurisdiction. Persons who access this information are responsible for complying with all applicable laws and regulations.