Rumor has it vaunted, long awaited institutional money, big investment in crypto is coming. One of the many holdups involves custody regulation, as both large funds and those ecosystem companies best poised look for a smooth way to guard cryptocurrency holdings securely, alleviating whales’ greatest fears: theft and loss.
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Investment Whales Want Custody Assurance
“There are a lot of investors where custodianship was the final barrier. Over the next year, the market will come to recognize that custodianship is a solved problem. This will unlock a big wave of capital,” hedge fund Multicoin Capital’s Kyle Samani told Olga Kharif and Sonali Basak by phone.
Custodial arrangements in traditional, legacy finance are well understood and regarded. Precious metals, diamonds, and even cash are carefully guarded by trusted institutions such as JP Morgan. The brave new world of cryptocurrency scares the hair off of big finance, so a regulated, risk averse arrangement, complete with liability insurance, is, some professionals feel, key to big money entering the space in a substantial way.
Popular ecosystem bank, Coinbase, is among those who’ve announced movement in this area. As these pages reported last month, it “announced a new suite of services meant to attract more big money players such as the many new crypto hedge funds that pop up all the time. It will launch a cryptocurrency custodian in partnership with an SEC-regulated broker-dealer to a group of initial clients that include 1confirmation, Autonomous Partners, Boost VC, Meta Stable, Multicoin Capital, Polychain Capital, Scalar Capital and Walden Bridge Capital.”
About the same time, Tokyo-based investment bank Nomura announced its new venture, Komainu. It was “established to help overcome barriers for institutional
