Custody on Steroids: Institutional Investing in Cryptocurrencies?

A lack of institutional-grade custody solutions for digital assets is often cited as one of the top, if not the top, challenge for traditional asset managers looking to enter this space. But custody services are developing to make crypto custody a non-event, even at the institutional level. A host of traditional and new custodians are working diligently on integrating crypto custody into traditional custody frameworks and regulatory environments, while also focusing on larger questions around process, demand and straight-through processing (STP).

New entrants, however, drive competition, and crypto custodians are coming under increasing price pressure. Instead of applying direct charges for digital asset custody based on asset value, we expect firms to find new revenue streams through monetizing their client base, for example by offering additional asset-related services, moving into trade execution/settlement or partnering with crypto platform providers and/or established traditional markets custodians.

This research report analyzes the differences between crypto custody versus traditional custody in the institutional space, describes the types/features of crypto custody and how they work, and predicts where business models are heading.