To satisfy the need for digital asset storage by institutions, Fireblocks and Taurus crypto firms are expanding their service offerings.
The integration of conventional financial products with cryptocurrencies is propelling North American crypto firms to focus on storing digital assets for institutional clients. Two of the most recent infrastructure providers seeking to expand their custodial operations in the region are Taurus and Fireblocks.
The establishment of a Taurus office in Vancouver, British Columbia, Canada, was declared on May 21 by the Swiss company “in response to the growing demand” for tokenization and custody services. Additional expansions are awaiting “the completion of a number of pending deals,” Taurus co-founder and managing partner Lamine Brahimi informed reporters.
Fireblocks are also motivated by the trend above of establishing a limited-purpose trust company under the New York Department of Financial Services (NYDFS) regulation. “It is increasingly clear that there is a lack of qualified custodians in the United States covering digital assets,” said Adam Levine, senior vice president of corporate development at Fireblocks.
Following the January approval of U.S. spot Bitcoin exchange-traded funds, registered investment advisers, asset managers, venture capitalists, and exchange-traded fund providers have become an expanding demographic of crypto holders, to which Fireblocks’s future company will be dedicated, pending approval.
“The existing regulatory framework in the United States has hindered the inclination of conventional custodians to make substantial investments in this market. Due to this, certain market participants have limited options for securing their digital assets with a qualified custodian, Levine explained.
As per the preapproved token or “green list” of the NYDFS, the custodial division of Fireblocks will provide initial custody services for Bitcoin. The market for crypto custody has experienced substantial expansion and is positioned for further growth.
The market for digital asset custody experienced significant growth in 2022, augmenting to $448 billion, driven by the imperative to protect investments from security vulnerabilities and adhere to regulatory obligations.
In addition to established cryptocurrency firms, including Ripple, Kraken, and Coinbase, which provide custodial services to institutional clients, the sector has also witnessed established firms vying for a portion of cryptocurrency revenue.
For institutional investors, HSBC, for example, has announced intentions to establish a digital asset custody platform focusing on tokenized securities. Regarded as the oldest bank in the United States, BNY Mellon introduced a digital custody platform for select institutional clients in 2022 to protect crypto assets.
To assure the security of digital assets, custody typically combines cold (offline) storage, hot (online) storage, multi-signature wallets, and multiparty computation. According to Ripple, the institutional cryptocurrency custody market may approach $10 trillion by 2030.
