Crypto Custody

Custody is an old banking function. A depositary bank holds a client's securities in a collective safe-custody account, keeps a record of ownership, handles corporate actions such as dividends and votes, and answers to supervisors for keeping client assets separate from its own balance sheet. In Germany this line of business runs under the Depotgesetz and BaFin's banking supervision, and a client never has to hold a physical share certificate to prove ownership.

A crypto asset has no share register and no central depositary by default. Ownership follows whoever controls the private key that can move the coins on a blockchain, so the custody question becomes a key management question: who holds the key, how is it protected, and what happens if the holder fails or is compromised.

A non-custodial wallet gives the holder sole control of the private key, often as a seed phrase the holder writes down and secures. Nobody can freeze or recover it if the phrase is lost, which is why the phrase "not your keys, not your coins" describes the trade-off: full control against full responsibility.

A custodial wallet puts a regulated third party in that role instead. A custodian stores the keys in its own infrastructure, usually a mix of offline (cold) storage for most holdings and online (hot) wallets for the balance it needs to settle transactions quickly, and it answers to a supervisor for how it does it. Finance Loop's knowledge hub answer on crypto custody sets out the difference in more depth, including what counts as institutional custody.

Under MiCA, custody and administration of crypto-assets on behalf of clients is a licensed crypto-asset service, one of the Class 3 services that needs 150,000 euros in minimum capital and authorization from a national supervisor. In Germany that supervisor is BaFin. MiCA requires a custodian to keep client crypto-assets segregated from its own holdings, to hold enough assets of the same type and quantity to cover its clients' claims, and to answer for loss caused by an incident such as a hack or an operational failure, unless the custodian proves the loss happened without its fault.

DZ Bank received BaFin authorization in December 2025 to run its meinKrypto custody platform under MiCA. Landesbank Baden-Württemberg began offering crypto custody in 2024 through a partnership with Bitpanda's institutional platform. Deutsche Bank expects its own MiCA custody license in the second half of 2026, with an initial offering covering bitcoin, ether and the stablecoins USDC, EURC and EURAU. Munich-based Tangany takes a different route: it sells custody infrastructure that a bank or fintech runs under its own license, instead of holding client assets itself.

Most crypto losses trace back to custody, not to a flaw in a blockchain's own code. An exchange or custodian that keeps too much value in an internet-connected hot wallet gives an attacker a single target, and a private key stored without a backup can be lost for good if the device that held it breaks. Multi-signature setups, where a transaction needs approval from several separate keys, and hardware security modules that never expose a key in plain form are the two controls institutional custodians rely on most to close these gaps. A MiCA license does not remove the risk; it forces the custodian to document how it manages the risk and to hold enough own funds to answer for a failure.

Custody and MiCAR compliance were among the topics of the Forum für Digitale Vermögenswerte, a German-language forum with Finance Loop as a partner, and the wallet and custody providers DFNS and AMINA spoke with 21X and Franklin Templeton at Tokenization & On-Chain Capital Markets, a Point Zero Forum side event in Zurich. Finance Loop partnered with the Crypto Assets Conference in Frankfurt, whose program covers custody and market infrastructure, and custody is a topic of its own Digital Finance Night for banks, asset managers and regulated service providers. Crypto custody sits in Finance Loop's Investment & Digital Assets track. Related pages: institutional crypto, MiCA in Germany and crypto in Germany.

Yes. MiCA lists custody and administration of crypto-assets on behalf of clients as a licensed crypto-asset service. A firm needs authorization from a national supervisor, 150,000 euros in minimum capital, and rules on segregating and safeguarding client assets before it can offer the service in the EU.

A non-custodial wallet leaves the private key with the holder alone; a custodial wallet puts a licensed provider in charge of the key and makes that provider answerable for keeping the assets safe. Institutional investors and banks use custodial storage because it fits their own compliance and audit duties.

DZ Bank runs its meinKrypto platform under a BaFin MiCA license, Landesbank Baden-Württemberg offers custody through Bitpanda's institutional platform, and Deutsche Bank plans to launch its own custody service for bitcoin, ether and euro stablecoins once its license is granted.