Bitcoin Custodianship Deep Dive: Fact or Fiction?

Analysis suggests Coinbase likely manages a portion of MicroStrategy’s massive $72B+ Bitcoin stash, despite the company’s opaque stance.

The Core Question Persists

MicroStrategy (MSTR), one of the largest holders of Bitcoin worth nearly $72 billion, has maintained its characteristic opacity regarding the exact institutions safeguarding its digital asset trove.

Despite facing sustained pressure from the crypto community and heightened regulatory scrutiny following industry tumult (FTX, Silvergate, Signature), MSTR refuses to publicly name its custodians.
The company invoked SEC Rule 83 to justify confidentiality in its SEC filings, citing operational security concerns.
This veil of secrecy contrasts with details revealed via SEC Rule 83 compliance

In its April 2023 correspondence with the SEC, prompted specifically by questions about recent crypto industry failures and borrowing against its Bitcoin position, MSTR did disclose limiting factors:

“Strategy maintains its Bitcoin in accounts at U.S.-based, institutional-grade custodians that have demonstrated records of regulatory compliance and information security… All of our custodians are New York Department of Financial Services (NYDFS)-regulated custodians.”

Narrowing Down the Possibilities

The NYDFS regulation criterion significantly narrows the field. Of the 35 entities holding BitLicenses at the time relevant filings were made (and arguably still meeting the criteria for institutional trust), only 9 held a specific “limited purpose trust” charter:

BitGo
Coinbase
GMO-Z.com
Fidelity Digital Assets Services
Bakkt Trust Company
Gemini
NYDIG
Paxos
Standard Custody & Trust Company

Articulated Clues & Potential Links

Coinbase CEO Brian Armstrong amplified public speculation by confirming MSTR utilizes the exchange’s custody service (Coinbase Prime) for a number of Bitcoin-holding public companies, placing MSTR well within Armstrong’s sphere of influence.

Coinbase’s own disclosures support this. MSTR has historically cited Coinbase as one of its approved custodians.

Furthermore, prior Bitcoin purchases by MSTR were notably facilitated through Coinbase’s platform. This represents a significant operational relationship beyond mere current custody.

Separate blockchain analytics via Arkham Intelligence suggested potential linkage between MSTR‘s Bitcoin and Fidelity Digital Assets Services, potentially accounting for 70,000 BTC ($3.5B). While this information hasn’t been independently confirmed by MSTR, Fidelity possesses the regulatory standing to be a contender.

Other potential custodians face hurdles:

GMO-Z.com’s stated primary custody focus on its US dollar-pegged stablecoins (ZUSD) removes them from contention as custodians for Bitcoin.
Bakkt Trust Company has a complex history regarding custody, potentially having sold its original custody unit. Direct confirmation from either Bakkt or parent Intercontinental Exchange was unavailable.
Standard Custody & Trust Company, recently acquired by Ripple and emphasizing white-label solutions, remains understated in public discourse but technically on the regulatory list.

The Underlying Controversy

The debate surrounding MSTR‘s custodian anonymity mirrors the crypto industry’s persistent tension between operational security and demand for transparency:

Fear of Vulnerability: Accusations that anonymity conceals potential risks, such as counterparty risk or inadequate security measures, particularly relevant given past institutional failures and liquidations.
Potential Advantage: Some argue discretion provides competitive advantages, minimizing exposure and potential sources of vulnerability.
Regulatory Ambiguity: The reliance on SEC Rule 83 highlights the ongoing struggle within new asset classes to balance regulatory compliance with market expectations for disclosure.