By
Godfrey Benjamin
April 23rd, 2024
In the nearest future, regulated crypto custody services are believed to be introduced across the crypto industry and bring significant changes.
As it has been informed by Bloomberg, regulated crypto custody services are said to enter the cryptocurrency industry and fully change the game. Experts explain the reason of a potential enormous impact of regulated crypto custody services on the market the following way: more and more high net worth individuals and institutional investors are engaged in cryptocurrencies and all of them need to find a secure way to keep their funds.
At the moment, security of funds may become a real headache for investors. A managing partner at Multicoin Capital Samani, who is one of those institutional investors taking part in testing of Coinbase Inc.’s new crypto-custody service, believes:
“There are a lot of investors where custodianship was the final barrier. Over the next year, the market will come to recognize that custodianship is a solved problem. This will unlock a big wave of capital.”
Some of Coinbase Inc.’s new services are almost ready, and now Coinbase is working on getting approval that will let it become a qualified custodian. In order to do it, it is necessary to meet strict US standards for storing assets. Though Coinbase is probably the most well-known company to offer institutional investors crypto custody services, there are also some other companies that develop similar services.
Circle and BitGo are also among the companies providing crypto custody services. And they are both going to offer regulated services. Some weeks ago, it was informed that BitGo had already filed an application to become a regulated custodian.
In May, another crypto custody services Komainu, that represents a joint venture of an investment bank Nomura Holdings Inc., and crypto companies Ledger and Global Advisors, started its operations.
There are a lot of talks about major Wall Street firms that have gone into the crypto industry and are considering an opportunity to work on crypto custody services or have already started their activities in this sphere. Bank of New York Mellon Corp, JPMorgan Chase & Co., and Northern Trust Corp. are among the companies that are said to be working on development of crypto custody services.
Regulated custody services would allow investors enter the crypto industry more actively as they will be more confident about the security of their funds. And, in the context of potential introduction of regulated crypto custody services, there is one very interesting question: How much money will be brought to the market?
In this regard, Sam Mcingvale from Coinbase said:
“About $20 billion in crypto assets are poised to flow into custody services once they’re available”.
Recently, the figure has been getting high, despite Bitcoin’s downward trend, as new projects hold initial coin offerings, introducing their own tokens to the market.
As for the cost of crypto custody services, it has become clear that they won’t be cheap. For instance, Coinbase takes a $100,000 initial fee and then 10 basis points per month. Moreover, its clients are required to have a minimum balance of $10 million.
Nevertheless, if there are more companies offering similar services, it may lead to decrease of prices. However, at the moment, there is no information when the regulators will approve these services.