Cryptoasset Anti-Financial Crime Specialist (CCAS) Certification Practice Test

Who stores the encrypted private keys with a cloud wallet?

1. The blockchain.

2. The service provider.

3. The browser service.

4. The user.

The correct answer is: The service provider.

In the context of cloud wallets, the service provider is responsible for storing the encrypted private keys. A cloud wallet typically operates in a way that the user accesses their crypto assets through a web interface or an app, while the actual storage of sensitive information, such as private keys, occurs on the servers managed by the service provider. This setup allows users to access their funds from any device without the need for local storage of the private keys, which offers convenience but requires a level of trust in the service provider’s security measures. The blockchain does not store private keys directly; it only records transactions and balances associated with wallet addresses. The browser service does not have the capability to manage or store private keys; its role is limited to facilitating user access to web services. Lastly, although users have control over their private keys in non-custodial wallets, cloud wallets transfer this responsibility to the service provider, emphasizing their role in key management. Hence, the service provider is key to the security and accessibility of the user's encrypted private keys in a cloud wallet scenario.