Crypto Custody Market Reaching High of $448 Billion in 2022

PricewaterhouseCoopers (PwC) and Aspen Digital’s joint report on the state of the digital asset storage industry reveals that the industry peaked at over $3 trillion in November 2021. Nevertheless, the more conservative part of the market stabilized in 2022 at a more modest figure of $447.9 billion.

About 120 custodial service providers

The report, which was released on July 11 and contains 39 pages, indicates that there were 120 providers of digital asset custody services as of April 2023. These providers are categorized into two main groups: third-party service providers and self-custodial solutions. The report also identifies a growing interest in crypto staking following the Ethereum merger and the emergence of non-fungible tokens (NFTs) and the metaverse as significant institutional developments.

Security is, according to the report, the biggest challenge facing the custody industry. Mistakes in proper governance, risk management and internal controls, as exemplified by the failure of FTX in 2022, have led institutions to seek to protect their assets more with self-custodial solutions or reputable digital asset custodians, rather than relying solely on exchange platforms.

Insurance is also an obstacle for custodial service providers, as self-custodial solutions do not provide insurance coverage and users are not compensated for loss of digital assets due to negligence. The report points out that reliable insurance policies are an important selection criterion for family offices when choosing digital asset custodians.

Recommendation: five-step process

The document recommends a five-step process for investors looking to choose a custody provider, including market analysis, developing a rating system, performance evaluation, and other preparatory measures.

Read Also:  Binance CEO's Crypto Holdings Reveal Surprising Portfolio Breakdown

Recently, the Canadian Financial Authority has issued guidelines to assist fund managers in complying with regulatory requirements for investment funds holding crypto assets. They have also expressed confidence in the regulated crypto futures market, which they say improves price discovery.

Recent Articles

Related News

Leave A Reply

Please enter your comment!
Please enter your name here