Fireblocks and Taurus are among the cryptocurrency companies broadening their services to cater to the increasing institutional need for storing digital assets.
The storage of digital assets for institutional clients is emerging as a prime focus for crypto firms in North America, driven by the integration of traditional financial products with cryptocurrencies. Taurus and Fireblocks are among the latest infrastructure providers aiming to expand their custodial services in the region.
On May 21, Switzerland-based Taurus announced the opening of an office in Vancouver, British Columbia, Canada, citing “growing demand” for tokenization and custody services. Lamine Brahimi, co-founder and managing partner at Taurus, mentioned that further expansions are contingent on “the completion of a number of pending deals,” as reported by Cointelegraph.
Similarly, Fireblocks is being driven by this trend to establish a limited-purpose trust company regulated by the New York Department of Financial Services (NYDFS). Adam Levine, senior vice president of corporate development at Fireblocks, noted the evident shortage of qualified custodians for digital assets in the United States.
Once approved, Fireblocks’ new entity will cater to registered investment advisers, asset managers, venture capitalists, and exchange-traded fund providers, reflecting the growing interest among crypto holders since the approval of U.S. spot Bitcoin exchange-traded funds in January.
“The existing regulatory framework in the U.S. has deterred traditional custodians from significantly entering this market. Consequently, there are few options available for certain market participants to securely store their digital assets with a qualified custodian,” explained Levine.
According to the NYDFS preapproved token or “green list,” Fireblocks’ custodian arm will initially offer custody for Bitcoin (BTC), Ether (ETH), and three stablecoins, with more assets to be added under the regulator’s guidelines.
The crypto custody market has seen significant growth and is expected to expand further. In 2022, the market for digital asset custody reached $448 billion, driven by the need to protect investments from security breaches and comply with regulatory requirements.
In addition to traditional crypto companies like Ripple, Kraken, and Coinbase offering custody services to institutional clients, traditional financial firms are also entering the crypto market. For example, HSBC has announced plans to launch a digital asset custody platform for institutional investors, focusing on tokenized securities. Similarly, in 2022, BNY Mellon, America’s oldest bank, launched a digital custody platform to safeguard crypto assets for select institutional clients.
Digital asset custody typically involves a combination of cold (offline) storage, hot (online) storage, multisignature wallets, and multiparty computation to ensure asset security. Ripple projects that the institutional crypto custody market could reach nearly $10 trillion by 2030.
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