Startups and established firms in the financial industry are locked in a battle as the race to control Crypto custody solutions take shape. According to the Wall Street Journal, the nascent sector proffers a multi-billion dollar business environment that is yet to be tapped. This market niche is so far attracting both tech-savvy startups and big players in the financial industry.
It is vital to note that Cryptocurrencies are stored as private keys or codes in Digital Wallets that are usually offered by Crypto exchange platforms. As Digital Assets, hackers target victims computers with malware and eventually gain access to these wallets and then transfer the private keys to their anonymous wallets. A custodial service serves the acritical purpose of securing the private keys in fool-proof storages which are usually offline.
Demand For Crypto Custody Services Is Spiraling
Institutions, as well as retail investors, are the main hodlers of Digital Assets. Due to security concerns following a spate of sophisticated Crypto heists such as the infamous Binance hack, most of Crypto owners are seeking managers to manage their Crypto accounts. Consequently, due to the immense security risks posed by hackers, these managers, in turn, look out for Crypto custody services to store their assets.
Additionally, retail investor especially sharks are also seeking Crypto custodial solutions as Virtual assets become more prone to theft due to their high value and unregulated nature.
Regulation Is Also A Factor In The Growth
Besides the organic demand for Crypto custody services, the US Securities and Exchange Commission (SEC), is also playing a role in the burgeoning of the services. This is because the commission requires registered investment advisers to deposit all their Cryptos with a qualified custodian. The basis of the law is to cushion Crypto investors from loss of wealth due to heists.
Companies Scrambling For The Business Opportunities
Platforms angling to get a share of the market in the Crypto space includes Paxos, Gemini, Coinbase, Anchorage Trust Co, BitGo Inc., etc. Some of them are Crypto exchanges and have the basic competencies of managing storage services.
On the same perspectives, other firms operating in the conventional financial markets are giving Crypto- focused firms a run for their money. A few of the include ICE +0.32% that recently acquired Digital Asset Custody Co, Fidelity Digital Assets, Intercontinental Exchange Inc that owns the New York Stock Exchange and more.
Custody Services Could Spur Crypto Adoption
Bigger institutions are risk-averse and most have been steering off Crypto markets especially at the height of the 2018 bear run. However, the charts are now in the green after a rebound of Bitcoin and more institutions are confident to invest in Bitcoin. Since security concerns are rife as hackers appear to outsmart security experts, a broad supply of trusted custodians could reinvigorate interest in Virtual assets and catalyze adoption.