As cryptocurrencies become more popular, institutions need a safe way to store their crypto funds. According to a new report, big banks are starting to take notice and have begun developing their own crypto custody services.
“JPMorgan Chase, Northern Trust, Goldman Sachs and several other banks are developing new products to hold cryptocurrencies in custody,” wrote American Banker earlier this week.
American Banker didn’t scoop the story: it’s been public knowledge for some time. The companies and various media reports have confirmed that major Wall Street institutions have already begun to develop crypto custody services.
Coinbase, one of the world’s largest crypto exchange platforms, made headlines last month for launching its crypto custody service. That service comes with a $100,000 setup fee, ongoing monthly fees, and a minimum deposit of $10 million. Now, Coinbase may be facing competition from some of the world’s largest financial institutions.
The American Banker report compares these custody services to safe deposit boxes.
“Like safe deposit boxes, these custody services would help bitcoin investors defend against theft.”
Institutions are clearly interested in investing in cryptocurrency. Their customers are requesting it, and institutions want to follow the money. One thing preventing institutions from investing in crypto, however, is a secure storage system. Institutional investors can’t afford to deposit $1 billion in customer funds into a crypto exchange only to have those funds disappear. Regulated crypto custody services would allow institutions to participate in the industry in a safe and secure way.
Other reports online are echoing that sentiment. In an article titled, “Top 6 Reasons Why Institutional Investors Will Join The Bitcoin Party Soon” we listed the “enhancement of custodial services” as the number one reason why institutional investors are entering crypto.
“Goldman Sachs is also considering offering cryptocurrency custody services which will apparently help overcome the barrier of lack of trusted custodianship for institutional investors. Ledger, the hardware crypto wallet manufacturer, which sold over 1 million hardware company also announced its support for 8 new cryptocurrencies recently.”
Other reasons listed on other crypto-media outlets include the upcoming (potential) launch of regulated crypto ETFs, the SEC’s potential future stance on cryptoassets, and favorable cryptocurrency regulations worldwide. For all of these reasons and more, institutional funds could start to pour into crypto in the near future.
When institutions have a safe and secure way to invest money into cryptocurrencies, it’s great news for the crypto industry. It seems like it’s only a matter of time before Goldman Sachs, JPMorgan Chase, and other financial giants launch regulated custody services for cryptocurrencies.