Blockstream Launches Institutional Bitcoin Custody System Built With Thales Hardware

Blockstream has launched an institutional Bitcoin custody system developed with French technology group Thales, combining Thales hardware security modules with Blockstream's Secure Multi-Party Computation (Secure-MPC) technology. The company announced the solution on Friday, positioning it as a response to increasingly sophisticated cyberattacks against internet-connected custody infrastructure.

The technical distinction matters. Conventional MPC implementations may run portions of the signing process outside dedicated security hardware. Blockstream said its architecture executes the entire signing protocol inside the protected environment of Thales' HSMs, letting institutions authorize transactions while keeping sensitive cryptographic operations within tamper-resistant hardware.

Blockstream co-founder and CEO Adam Back, the cryptographer whose Hashcash system helped lay the groundwork for Bitcoin's proof-of-work mechanism, said conventional MPC protocols are too complicated for the cold storage settings that institutions increasingly demand.

Why does Back think MPC is the wrong tool for cold storage?

"When people talk about MPC, they're talking about some very esoteric and complicated protocols that are hard to secure and are very interactive. So you can't really use them in a cold storage setting," Back told Cointelegraph.

The problem, in his telling, is communication. MPC protocols require devices to exchange messages during signing. That interactivity conflicts with air-gapped setups, where signing equipment stays deliberately disconnected from networks.

Back pointed to the $6.3 billion Binance hack as evidence of what can go wrong with internet-connected infrastructure. According to Binance's investigation, attackers compromised employee devices and obtained credentials that gave them access to the exchange's wallet-signing infrastructure.

"If you connect equipment to the internet, even if it's via firewalls and so on, there is risk that you can get unauthorized access. You can get hackers into the network, get hackers with access to logins they shouldn't have and so on," Back said.

What changes with AI in attackers' hands?

Back argued that artificial intelligence raises the stakes for complex cryptographic implementations. Where human auditors might miss subtle bugs, AI tooling can systematically hunt for them.

"The AIs can help attackers find small implementation errors and things like that, which may not be obvious," Back said.

The comment cuts at the operational heart of institutional custody. Complex MPC codebases present a large attack surface. Each implementation quirk is a candidate flaw that machine-assisted attackers can probe faster than defenders can patch. Back's answer is reduction, not addition: shrink the code, shrink the surface, and move the keys offline.

"Complexity is the enemy of security. And going back to basics is the answer, you know, just cold-store it," Back said.

Asked whether the broader custody industry would follow the same path, Back said he hoped so. He argued institutions should "adapt to the environment" by moving assets into cold storage to reduce exposure to potential AI-assisted attacks.

What does this change for institutional custody buyers?

For custody operators, the product reframes the build-or-buy calculus around hardware-anchored signing. Running an MPC protocol end-to-end inside certified HSMs, rather than partially on general-purpose servers, gives compliance teams a cleaner story to tell regulators and auditors. It also reduces the operational burden of managing interactive signing ceremonies across distributed devices.

The Blockstream-Thales partnership pairs a Bitcoin infrastructure specialist with an established enterprise hardware vendor, a combination that signals where institutional demand sits: less experimentation with novel cryptographic flows, more hardened, auditable signing environments.

The launch also lands in a tense moment for Blockstream itself. Hackers who breached the company's Liquid Network recently hold nearly 600 BTC, and Blockstream has publicly refused to pay a ransom — a backdrop that sharpens Back's argument that connectivity itself is the liability.

As AI-assisted attack tooling matures, the custody market's center of gravity looks set to shift further toward offline, hardware-bound signing architectures, with simpler protocols gaining favor over interactive ones.