Earlier last week, Lunar Digital Assets reported how Coinbase announced its Coinbase Custody offering for institutional investors looking for “battle-tested cold storage for crypto assets, an institutional-grade broker-dealer and reporting services.” This made huge waves in both the cryptocurrency and finance world as it signaled a step forward towards bridging the two spaces. Even though Coinbase harbors $20 billion in crypto assets, it is not the only one looking to capitalize on the emerging need for custody services by large financial institutions.
Ledger, (in tandem with Trezor) currently operates as one of the global market leaders for cold-storage wallets. The company recently revealed to CoinDesk that it would begin offering new crypto assets every Tuesday, beginning in August with the goal of hitting the top 100 market cap coins by the end of 2019. By bolstering its lineup of more tokens, Ledger aims to offer custody services to hedge funds and other institutional investors in the long-term.
Currently, Ledger is proposing two custodial services for institutional investors. The first will be a series of partnerships with banking institutions that use Ledger’s tools for full-custody services, similar to a traditional deposit. The second initiative, called Vault, will be a customized solution that allows institutions to self-manage crypto assets with a multi-signature wallet, connected to individual hardware devices for all participants.
Another significant announcement involving custodial services for institutional investors came by way ofBitGo this past week. BitGo’s CTO, Benedict Chan, mentioned how:
“[financial] institutions, they generally don’t want to self-manage their coins. They are looking for someone that can support multiple coins.”
BitGo is moving rapidly to obtain a BitLicense in New York and a qualified custodian license in South Dakota to establish itself as an accredited cryptocurrency custodian for institutions. By the end of 2018, BitGo aims to offer more than 100 cryptocurrencies for its clients, according to BitcoinExchangeGuide. In the process of adding cryptocurrencies, BitGo’s relied heavily on the feedback of institutional clients and partners to ensure that the tokens offered are backed by reputable teams with practical utility. In addition, BitGo will develop solutions to properly manage airdrops and hard forks in its custody initiative.
Coinbase, BitGo, Ledger (along with a number of other companies) are racing to become to the one-stop-shop for institutional investors to securely store billions of dollars worth of crypto assets. Though main stream adoption has yet to take place, this arms race of custody services indicates the emerging tertiary industries that will provide a more firm foundation for institutional firms to begin pouring in billions of dollars worth of capital into the space. This is but a step towards eventual mainstream adoption.