The issue of custody, or how to safely store cryptocurrency has been a matter of contention for institutions. In fact, its prevented quicker adoption.
But that may soon change
To help solve the trust issue, companies are rushing to build custody solutions.
For institutional investors that are used to having money safely stored or FDIC insured, where they would put their high-paying clients’ cryptocurrency is said to be the biggest question mark, says CNBC. “Institutional investors are very interested in finding a solution, but they haven’t seen one that they think is perfect for various reasons.”
The Race to Fill the Gap for Institutions
Cryptocurrency company, BitGo is one of the companies that are helping.
Just this week, the company received a state trust company charter from the South Dakota Division of Banking. This makes the company a qualified custodian for cryptocurrency.
That means the company would hold the securities on behalf of the funds, which then cuts the risk for clients worried about potential loss. Should that happen, the bank could provide quite a boost to the number of funds betting on virtual currency.
“This is the missing piece for infrastructure — it’s a treacherous environment today. Hedge funds need it, family offices need it, they can’t participate in digital currency until they have a place to store it that’s regulated,” notes CNBC.
BitGo isn’t the only Game in Town
Coinbase, Gemini, Goldman Sachs, and Northern Trust are also exploring custodial services.
Earlier this year, Nomura created a custody consortium called Komainu. Bloomberg also notes that Bank of New York Mellon Corporation, and JP Morgan Chase are working on cryptocustody services or exploring it, too.
“The Times they are A-Changin’”
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