A bitcoin bank is not a new kind of exchange.
It is closer to an older idea: a bank exists to safeguard capital, provide reliable access, and remain conservative when it is tempting not to be.
Bitcoin changes the rails. It doesn't change the standard.
This note sets out what "bitcoin bank" means as a custody standard, and what it should exclude.
The role of a bitcoin bank
Most financial products optimize for one of two things:
- Velocity: more movement, more activity, more features
- Return: more yield, more leverage, more complexity
A bitcoin bank optimizes for something else:
Continuity of ownership.
The ability to hold long-term capital through changing conditions, without discovering that access depends on hidden assumptions.
Bitcoin holders are often looking for a form of money that can't be diluted by issuance. A custody relationship shouldn't reintroduce dilution of a different kind through obligations, dependencies, or hidden uses that make your access conditional.
A bitcoin bank is designed to keep custody simple enough that it remains reliable.
What a bitcoin bank is
1. A custody institution, not a trading destination
The primary product is custody.
Buy and sell may exist as supporting services, but they should not become the center of gravity. When the institution is built around trading, every decision eventually serves trading: the interface, incentives, product roadmap, even the culture.
A custody-first service keeps the hierarchy clear:
- custody is central
- access is supporting
- complexity is resisted
2. Built for holders, not sessions
A holder thinks in years.
So a custody-first product should feel quiet:
- fewer nudges
- fewer "opportunities"
- fewer reasons to act
This isn't about avoiding markets. It's about respecting the client's intent. If the intent is long-term ownership, the product shouldn't be designed to turn ownership into constant decision-making.
3. Reliable access
Custody-grade access means ordinary actions remain ordinary:
- you can withdraw bitcoin on-chain to your own address
- you can convert when you choose
- you can understand the terms without interpretation
A custody relationship becomes fragile when access becomes conditional, when withdrawal feels like an exception instead of a baseline.
4. Plain-language accountability
A well-run institution should be able to explain, simply:
- what happens to client bitcoin
- what it is and isn't allowed to do with it
- how withdrawals work
- what is disclosed over time
- how incidents are handled
If the relationship can't be explained without drama or dense marketing language, it becomes difficult for a client to evaluate.
What a bitcoin bank isn't
1. Not an exchange
Exchanges are built around activity. They may be excellent at that.
A bitcoin bank is built around custody and continuity. Its success is measured differently:
- stable policies
- consistent operations
- straightforward withdrawals
- a narrow mandate maintained over time
2. Not a yield product
Some services offer yield on bitcoin. That can be a legitimate choice, if understood as a different category.
Yield generally means the asset is being put to work in some form, which can introduce:
- borrowers or counterparties
- obligations
- or liquidity constraints
That may be acceptable for an investment product. It is not equivalent to custody.
A bitcoin bank keeps those categories separate.
3. Not a leverage product
Leverage increases fragility. Fragility is the opposite of continuity.
4. Not a feature showroom
Custody weakens when it becomes "one feature among many."
The more the institution depends on novelty to grow, the more likely it is to adopt incentives that conflict with conservative custody. A bitcoin bank protects its mandate by saying "no" often.
How to assess a "bitcoin bank" claim
You don't need a formal audit to ask useful questions. A careful client can evaluate the posture with a small set of standards.
1. Is custody clearly defined?
You should be able to determine, in plain language:
- is client bitcoin held 1:1 for custody?
- is it segregated from the institution's own assets?
- can it be used, pledged, or lent?
If answers are vague, assume the relationship is not custody-first.
2. Is exit straightforward?
The cleanest test of custody quality is whether withdrawal is treated as normal.
A healthy posture looks like:
- clear withdrawal policy
- consistent handling
- no improvisation when it matters
3. Are incentives aligned with long-term reliability?
Ask what the institution is rewarded for.
If the business model depends on constant activity, the product will eventually encourage activity. A custody-first institution should be able to survive by doing the boring thing well.
4. Can the institution explain itself simply?
A custody relationship shouldn't require faith.
If it cannot be explained clearly, it cannot be evaluated clearly.
Why this definition matters
Bitcoin gives clients a real alternative: self-custody. That means a custody bank must earn its role.
It earns it by offering:
- operational continuity
- disciplined process
- custody-first restraint
- and straightforward exit
"Bitcoin bank" is a standard, not a label.
