Leading US-based Crypto Custodian Providers for Institutional Clients1. When institution ready?
The crypto industry has expected institutions to enter for quite a long time. When institution comes in we will see mass adoption, they say. To achieve that, we have to be institutional ready. Following the regulatory requirement, one major infrastructure is crypto custodial service. Today we will look at what I believe are the top custodian providers for institutional clients.2. How institutional clients evaluate a custodian provider?
To have a better understanding of what players are leading in this field, we need to take one step back and see how institutional clients evaluate a custodian service provider. According to a keynote given by Mike Belshe, co-founder and CEO of BıtGo, at the 2019 Pantera Annual Summit, typically his clients ask him about his team, its financial standing, its insurance policies, whether completed the SOC1 type audit , regulatory compliance, and the tech. Borrowing this logic, in this article, I will use client size and asset under custody as the two major criteria.
With that in mind, we will take a look at Coinbase Trust, Fidelity, Bakkt, Paxos, Bitgo, Gemini Trust, Prime Trust, Kingdom Trust and other emerging custodian providers which have been covered by major crypto related media.3. Who need crypto custodian services?
In the US, under the Investment Advisers Act if 1940, “for any investment adviser with asset under management over $150,000,000 … shall take such steps to safeguard client assets over which such adviser has custody, including, without limitation, verification of such assets by an independent public accountant, as the Commission may, by rule, prescribe.”
This means any hedge funds, OTC desks, broker dealer with an asset over 150 million USD needs a licensed custodian. As Coinbase Custody mentions in its introduction video, such clients include asset allocators, endowment,...