Asset managers and institutional investors are much likely to trade digital assets if there is a recognised custodian involved, suggests recently publish research.
A study of 300 investment managers by the Swiss Stock Exchange (SIX) found that more than half (55%) would be more willing to transact in the crypto world of their digital assets were held by a traditional custodian.
It is estimated that there are around $223bn in digital assets under custody around the world.
It should also be noted that SIX has its own crypto custody offering, which was launched in October 2022 via the firm’s SIX Digital Exchange Web3 division, with the remit to target institutional investors.
Currently, the use of a custodian in the crypto world is not quite the same as in the conventional capital markets. It is the crypto-asset firms that appoint the custodian and there are typically more limited consumer protection measures in place.
This was evident in the wake of the collapse of crypto exchange FTX when it became clear that clients’ assets were note securely segregated and became mixed with the banks’ own capital.
The report, Cornerstones for Growth, a Future of Finance, also found that 60% of respondents see a growing confidence in the trading infrastructure around crypto as a factor in increased institutional investment in the asset class.