What Is the Trade-off between Security and Liquidity in Crypto Custody?

The trade-off is that increasing security (e.g. moving to deep cold storage) decreases the speed and ease with which the assets can be accessed and traded (liquidity). Highly liquid assets are kept in hot storage for quick access, but this is less secure.

Conversely, highly secure cold storage requires complex, time-consuming procedures for withdrawal, which reduces liquidity.