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The conventional investing world views the provision of custody of assets as a dull but essential activity: It is not hard to ensure the security of your clients' stock and bond portfolios.
The almost $2 trillion cryptocurrency market is rife with activity, and custody is far from dull.
Solana custody tool Marinade's chief commercial officer and former head of digital asset custody at Bank of New York Mellon Hadley Stern said that the service's price tag may be as much as ten times more than that of protecting more conventional assets like cash and securities.
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That is why it might be a promising development sector for startups, Wall Street banks, and other companies seeking to enter the digital asset market.
Traditional financial institutions are mostly on the sidelines due to the legal uncertainties surrounding digital assets, while crypto-native enterprises like BitGo and Coinbase Global have emerged as leading service providers.
Even while the industry is only worth around $300 million right now, it's still a tempting prospect for companies like Fireblocks, who predict yearly growth of around 30% for the sector.
New players are putting their money on the idea that this industry will grow significantly.
Global powerhouses in custody services, including BNY Mellon, Citigroup, and State Street, have either begun to dabble with cryptocurrency custody or have shown interest in doing so.
Disputes over custody have persisted throughout crypto's history, with many early adopters standing by the motto "not your keys, not your coins."
BlockheadThe idea originated from the fact that digital wallets could only be opened by those with the secret encryption keys.
The risk of theft and cyberattacks has decreased thanks to custody services, yet mistakes have persisted.
Robinhood Markets, a retail broking, and Galois Capital, an investment business, both settled with US authorities this month, with a portion of the settlements pertaining to crypto custody issues.
Robinhood has said that it has resolved the issues.
The significance of qualified custody to institutional investors is shown in both instances.
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