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Report: The Market for Cryptocurrency Custody Reached $448 Billion in 2022

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According to researchers, the two biggest developments for the custody market are the growth in interest in cryptocurrency staking and no fungible tokens.

In November 2021, the digital asset market peaked at approximately $3 trillion.

The custodial segment of the market, however, stayed at the lower level of $447.9 billion in 2022.

These statistics were taken from a report on the state of digital asset custody that the wealth technology platform Aspen Digital and consulting company PricewaterhouseCoopers (PwC) jointly produced.

On July 11, the 39-page report was made available.

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According to the report, there will be 120 custody service providers by April 2023, divided into two main groups: third-party service providers and self-custody options.

The Ethereum Merge has increased interest in crypto staking, along with the emergence of nonfungible tokens (NFTs) and the metaverse, which have drawn institutional investors.

These are some of the significant institutional developments mentioned in the research.

According to the survey, security presents the biggest concern for the custody business.

READ ALSO:SEC Reacts to Coinbase In Ongoing Lawsuit

Due to inadequate risk management, governance, and internal controls, as evidenced by FTX’s failure in 2022.

Instead of only holding their assets on exchange platforms, institutions are increasingly trying to protect them through self-custody solutions or trusted digital asset custodians.

Insurance coverage is a further area of difficulty for custodians.

Users of self-custody solutions are not reimbursed for any accidental loss of digital assets and no insurance policies are provided.

Family offices are cited in the report’s sources as an essential group to consider when selecting a custodian for digital assets.

The research offers investors a five-step process for choosing a custody service provider, including market mapping, grading providers, performance reviews, and other preliminary tasks.

Canada’s financial regulator provided advice earlier this month to assist fund managers in adhering to legal requirements for investment funds holding crypto assets.

Additionally, it has reaffirmed its confidence in the cryptocurrency futures market, which it claims “promotes greater price discovery.”

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