How investors can keep crypto assets safe

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As crypto assets gain popularity with everyday investors, keeping them safe takes on increased importance.

One of the obstacles to doing that, though, is that with crypto assets—such as digital currencies and NFTs—there’s nothing physical to hold onto. Often, you must depend on a code, known as a key, to gain access to your holdings, and if you lose that key, or if it’s stolen, the assets are gone.

Another issue is that scammers are actively coming up with new ways to steal crypto assets. Cryptocurrency-based crime soared to a new high last year, with scammers garnering $14 billion in total cryptocurrency value, up from $7.8 billion in 2020, according to data provider Chainalysis.

No matter how much precaution you take, there’s never a 100% guarantee your crypto assets will be safe. Still, there are several best practices that industry experts recommend.

Choose the right type of storage

There are multiple options to store crypto assets, and how you go about it depends largely on factors such as how often you trade and how much crypto you hold.

One option is the custodian method. This is where companies like Coinbase Custody and Gemini are in charge of securely storing your funds, similar to how a bank keeps your money in a checking or savings account. These services are known as custodial wallets, and they take charge of your private keys—long, randomly generated passwords made up of numbers and letters—that allow crypto transactions to occur. You log in to your account with an email and password—ideally with multifactor authentication set up—and you’re good to buy, sell and trade crypto.

These custodian services charge an annual custody fee that generally runs less than 1% of the assets under custody, and there may be