The global outlook on cryptocurrency is fast-changing and subsequently giving rise to a large number of crypto custody solutions. The services are aimed at institutional investors and firms who seek to secure their crypto assets. Interestingly, the European sub-continent has established a firm ground when it comes to providing crypto-custody solutions.
Increasing Demand for Crypto Custody Solutions
When it comes to providing custody solutions Europe stands in the first place, followed by the United States and then Asia.
Earlier this year, Swiss Investment bank Vontobel launched the ‘Digital Asset Vault. The latter allows Vontobel’s clients to issue instructions for the purchase, custody, and transfer of digital assets integrated within their familiar banking infrastructure and regulated environment. Moreover, the clientele includes over 100 banks and wealth managers. Also, this year German Stock Exchange Borse Stuttgart launched their custody service for digital assets.
For many, it is the bridge that will support institutional capital moving into the cryptocurrency market. There have been reports of major banks testing and in some cases rolling out crypto custody solutions. Moreover, the European Securities and Markets Authority (ESMA) believes that while there are difficulties in applying custodial requirements to cryptocurrencies, greater clarity around them as per the EU financial services rules will help these services flourish.
Recently, Mercury Digital Assets, a leading technology provider for digital asset markets and UniCrypt Group, an IT firm that provides crypto-management and custody solutions announced the formation of the first institutional liquidity pool for digital assets in Europe. The pool will be based in Switzerland and Liechtenstein and will go live on the 18th of November.
The synergy will provide an end-to-end solution between the fiat and the crypto world. It will provide banking services on a global scale and provide custody solutions for digitized assets. Not only will the crypto pool allow for crypto trading, stablecoins and other digitized assets can also be traded.
According to research by the Bank of New York Mellon, there is an increasing demand in the market for a traditional, established custodian to provide secure storage of cryptocurrencies. Earlier this year, BNY Mellon took its first step in the cryptosphere and established a partnership with digital currency exchange Bakkt to help it launch a custody service.
Moreover, State Street was among the first top custodians who expressed interest in launching crypto custody, but their efforts didn’t come to fruition. Another firm, Northern Trust provides fund accounting and reporting services for a few selected clients who invest in cryptocurrencies.
Last month, Swipe a cryptocurrency wallet system announced the establishment of a strategic relationship with Coinbase to provide custody solutions for its clients.
Recently, ABACA, the regulatory organization of the Cagayan Economic Zone Authority enlisted CoolBitX to create cold storage options for security tokens in Southeast Asia.
The previous month, Trust and custody services provider Legacy Trust announced its plans to set up a business-focused entirely on institutional-grade cryptocurrency custody solutions. The enterprise will be named, First Digital Trust and it will expand Legacy Trust’s existing digital asset custody arm as a separate entity with its own unique partnerships and shareholders.
Why Crypto Custody Services?
Private investors usually store their crypto assets in an exchange wallet, which can often be risky. Here comes the role of cryptocurrency custody services. They are third-party providers of storage and security facilities with the main purpose of safeguarding investor assets.
It helps reduce risks with institutional investments as large amounts are involved. This is also the reason why regulatory bodies such as the US Securities Exchange Commission (SEC), the Monetary Authority of Singapore (MAS) and the United Kingdom’s Financial Conduct Authority (FCA) require institutional investors to secure their clients’ funds with a regulated custodian
Will crypto custodian services eventually lead to higher interest and trust in cryptocurrencies? Let us know, what you think in the comments below!
Disclaimer The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.
Coming from a physics background the unpredictability and intrigue of the cryptoverse attracted me to take a dive in this field. I am all eyes and ears for the latest trends in blockchain and crypto sphere. Whenever I am not writing or researching, I love to read sci-fi novels, play basketball and watch action movies. I strongly believe that blockchain and cryptocurrency will bring lasting transformations in people’s lives in the years to come. You can reach out to me at supriya [at] coingape.com.