The interest in and need for crypto custody services has never been greater. The size of digital assets under custody has grown sevenfold in the three years between January 2019 and January 2022 – from $32 billion to $223 billion.
Since then, we have seen the value of cryptocurrencies plummet to all-time lows, the collapse of so-called stablecoins and a rise in unscrupulous crypto scams. All of these instances have shown why there needs to be a proven crypto custody market that can properly safeguard clients’ assets.
So far, we have seen these services emerge from two camps– the traditional asset servicing sector and the digitally native sector. While the former comprises a handful of providers already dominating the global custody market, the latter is still an unknown quantity.
It remains to be seen if the digitally native providers, many of whom also operate crypto exchanges, will be able to stay in the market and compete with the global custodians, given that many of them are slashing their headcount as they deal with the current crypto carnage.
Proper competition is vital in this fledgling sector, and not just between a handful of global behemoths that all do largely the same thing. There must also be a place for genuinely innovative newcomers who aim to achieve more than simply ensuring they don’t lose their clients’ money.
Nicholas Pratt, Technology & Operations Editor
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