Crypto custody emerges as a promising segment amid evolving regulations.
While safekeeping traditional assets is routine, crypto custody presents unique challenges due to the volatility and the technology involved. Custody services for digital currencies are estimated to be 10 times costlier than for cash or stocks.
Startups and established financial firms are now exploring this $300 million market as it is projected to grow by 30% annually.
Crypto wallet firms like Coinbase and Bitgo have led operations so far in the largely unregulated landscape.
Major banks including BNY Mellon, State Street, and Citi have either launched or expressed interest in crypto custody solutions.
Some early enthusiasts had embraced self-custody over third-party risks, but regulated services now provide security against theft and hacks.
Wall Street participants are cautiously moving forward with pilots despite uncertain rules around digital holdings.
Nasdaq paused its plans last year while BNY Mellon is yet to scale after announcing infrastructure in 2022. Companies continue trialing various approaches including custody of tokenized traditional assets.
With $2 trillion in digital currencies, evolving oversight could help unlock the potential of this complex but fast-growing segment.
