Onramp: Bitcoin-Only Multi-Institution Custody
Onramp is a bitcoin-only asset management platform offering "multi-institution custody".
Instead of trusting one custodian to store your BTC, you use a 2/3 institutional multisig that is auditable on-chain.
"I Like Bitcoin, but I'm Not Technical Enough for Self-Custody.."
Why consider Onramp if you're a high-net-worth individual?
As bitcoin gains value against fiat currencies, previously moderate amounts of BTC can become extremely valuable.
This brings up the custody question:
Am I tech-savvy enough to store my own keys, operate a multisig etc. or should I trust a custodian?
A single custodian can be a central point of failure.
You can also mess up badly storing your own keys.
Maybe the price of bitcoin didn't go to zero like fiat economists warned... but your allocation went to zero because you lost your keys!
Solution for HNWIs and Institutions
Onramp's multi-institution custody provides a middle ground for high-net-worth individuals, corporate treasuries, family offices and other institutions.
For this type of investors, the concept of financial intermediaries custodying assets goes back thousands of years.
As Bitcoin becomes more popular, not everybody will be able to store their own BTC on-chain.
Not your keys, not your coins.. but if you manage billions of dollars worth of the hardest money ever, it might be tempting to leave asset management to professionals.
Multisig Vault Controlled by 3 Institutions
In Onramp's solution, a client's funds are stored in a segregated vault, controlled by 3 multisig keys.
🔑 1 key is held by Onramp
🔑 1 key is held by BitGo
🔑 1 key is held by Coincover
To move funds from the vault, 2 keys are needed to sign transactions.
None of the institutions can move funds unilaterally.
Keys are stored offline and in geographically distributed locations.
Ideal for Large, Long-Term Holdings
You could think of Onramp as a private, distributed bank.
But since your funds are in an auditable on-chain multisignature wallet, they cannot be used for rehypothecation or fractional reserve banking.
You can withdraw anytime you want, but Onramp's vaults are ideally designed for multi-year or multi-decade storage.
For this reason, the withdrawal process might take days in order to collect all the signatures from the vault signers.
To onboard to Onramp, you will have to go through KYC and a video verification (used alongside withdrawal attempts to make sure you're not under duress when withdrawing funds).
Besides institutions, Onramp is directed towards accredited investors or people with $100k+ to invest/deposit.
You can be a seasoned Bitcoiner seeking to diversify custody solutions, or a newbie.
Onramp also provides educational help and concierging for private clients.
No Taxable Event When Withdrawing
Unlike traditional funds and Bitcoin ETFs, withdrawing from an Onramp vault will not trigger a taxable event.
Customers' primary relationship is with Onramp: if they want to withdraw, they are in touch with Onramp (which then collects the necessary signatures).
Onramp was established in 2022, and is based in Austin, Texas.
One of the other custody providers, BitGo, was established already in 2013, and is a custodian in two Bitcoin ETFs currently trading in the US (Hashdex & Valkyrie).
The 3rd provider, Coincover, was founded in 2018. It operates in the UK, specializing in risk mitigation and recovery.
Distributing Custodial Risk
Having multiple institutions as custodians can reduce the risk of Executive Order 6102 -type events (the US government banning gold ownership), especially if the custodians are in different jurisdictions.
This type of multi-institution custody could add even more participants to a multisig (e.g. 3 of 5).
This could be useful especially for Bitcoin ETF custodians to avoid single point of failures (as of June 2024, Coinbase custodies 8 out of the 11 Bitcoin ETFs in the US).
Besides its custody product, Onramp also offers e.g. bitcoin inheritance planning, tax and accounting assistance, and investment funds.
If you want to retain some of the keys yourself, "collaborative custody" is what you're looking for.
You can learn more about collaborative custody in this older Twitter thread I wrote.
What do you think about Onramp's concept of "multi-institution custody"?
Do you prefer self-custody no matter large the amount, or would you prefer a custody solution like this?