Custody & Security
How MPC Custody Works for Institutional Digital Assets
How multi-party computation (MPC) custody works: key shares, threshold signing, tiered warm and cold storage, policy controls, and what institutions should verify.
Topic Hub · Custody & Security
Digital Asset Custody
Published
Custody determines who can move an institution's digital assets and under what controls. This hub explains how multi-party computation (MPC) and multisignature schemes remove single points of failure, how warm and cold storage trade availability against exposure, and what an institution should verify in a counterparty's custody and security program.
In digital assets, possession of a private key is control of the asset. Institutional custody is therefore an exercise in making sure that no single person, device, or location can move funds alone, while keeping enough availability to trade and settle when the market requires it.
The articles in this hub explain how multi-party computation distributes signing authority, how warm and cold storage are tiered by exposure, and how policy engines, allow-lists, and audits turn cryptography into an operational control. The comparisons set MPC against multisig and cold storage against warm wallets so a desk can match each to its use.
Articles in This Topic
Comparisons
Comparison
Cold Storage vs. Warm Wallet for Institutional Custody
Cold storage vs. warm wallet for institutional custody: exposure, signing speed, controls, what belongs in each tier, and how settlement flows move between them.
Comparison
MPC vs. Multisig for Institutional Digital Asset Custody
MPC vs. multisig for institutional custody: how each distributes signing control, chain coverage, on-chain visibility, fees, and which fits which program.
Key Terms
- Cold Storage
- Cold storage is the custody of digital assets with private keys or key shares that are never exposed to an internet-connected system, so that signing requires a deliberate, controlled process to bring the key material into use. It protects against remote compromise at the cost of slower access.
- Hot Wallet
- A hot wallet is a wallet whose private keys are held on internet-connected systems so that it can sign transactions automatically and immediately. It offers the highest availability and the highest exposure to remote compromise, so institutions keep hot wallet balances small and tightly monitored.
- Multi-Party Computation (MPC)
- Multi-party computation (MPC) is a cryptographic technique in which a private key is generated and held as separate shares by multiple parties or devices, and a transaction is signed jointly without any party ever assembling the full key. In digital asset custody it removes the single point of failure that a complete private key represents.
- Multisig
- A multisig wallet is an on-chain arrangement in which a transaction is valid only when signed by a required number of independent private keys out of a defined set, such as two of three. The rule is enforced by the blockchain's script or smart contract, so every participating key remains a complete key held by its owner.
- Private Key
- A private key is the secret number that authorizes transactions from a blockchain address by producing a digital signature that the network verifies against the address's public key. Whoever can use the private key controls the assets at that address, which makes key management the foundation of digital asset custody.
- Warm Wallet
- A warm wallet is a custody tier in which key material is protected by controls such as multi-party computation and policy approval but can sign transactions within minutes, so that an institution can settle trades and payments during the day without exposing its long-term holdings. It sits between hot wallets and cold storage.
Frequently Asked Questions
- What is the difference between MPC and multisig custody?
- Multisig uses an on-chain script that requires several independent private keys to sign a transaction. MPC splits a single key into shares held by different parties and produces one signature without any party reconstructing the full key. Both remove the single point of failure; MPC works across chains that lack native multisig and produces standard on-chain signatures.
Sources
- Multi-Party Threshold Cryptography — National Institute of Standards and Technology