Kyle Samani, a hedge fund manager at Multicoin Capital, believes that the barriers preventing whales and institutional investors from coming on board are about to end. Samani was optimistic that once the custodianship issues which are currently being addressed by various industry players are solved, a big wave of capital is coming to the nascent industry. This wave will be catalyzed through the advancement of custodian solutions for digital assets.
While existing custodians are reluctant to move into the crypto space, Coinbase has already started making strides into the custody space. With a $100,000 setup fee and a minimum balance of $10 million, Coinbase is testing a cold storage solution for investors with deep pockets
Samani is part of a group that has been testing Coinbase’s new custody service, which is just one of many that have been launched in the ecosystem. Coinbase is optimistic about acquiring approvals in the near future to serve clients that are yearning for qualified custodians, but that adhere to the stringent measures set by the US authorities that guard assets.
Additionally, global financial services group Nomura recently launched institutional-grade custody services for cryptocurrency assets, and earlier this year BitGo acquired Kingdom Trust, a $12 billion asset manager to act as custodian for their assets – with talks of BitGo even becoming an independent custodian in future.
Coinbase has begun the approval process for being declared a qualified custodian under US standards. Startups Circle and BitGo have also been in talks with regulators. Significant strides in custodianship came in May when Nomura Holdings Inc. joined Ledger and Global Advisors to create a consortium known as Komainu.
Regulated custody offerings will bring the much-needed institutional investors to the crypto market, which will open up huge positions in the stock market without the need to take personal responsibility for the custody of the funds. This will also allow hedge funds to give their traders millions of dollars without risking them flying to the Bahamas with it, and it helps to prevent outside theft and accidental losses as well, essentially acting as an insurance policy for the billions being traded every day.