The storage of digital assets for institutional clients is the next target for crypto firms in North America, driven by the merger of traditional financial products with cryptocurrencies. Taurus and Fireblocks are two of the most recent infrastructure providers looking to expand their custodial business in the region. 

On May 21, Switzerland-based Taurus announced an office in Vancouver, British Columbia, Canada, “in response to the growing demand” for tokenization and custody services. Additional expansions are awaiting “the completion of a number of pending deals,” Lamine Brahimi, co-founder and managing partner at Taurus, told Cointelegraph.

The same trend is also pushing Fireblocks to launch a limited-purpose trust company regulated by the New York Department of Financial Services (NYDFS). “It is increasingly clear that there is a lack of qualified custodians in the United States covering digital assets,” said Adam Levine, senior vice president of corporate development at Fireblocks.

Upon approval, Fireblocks’ future company will be dedicated to registered investment advisers, asset managers, venture capitalists and exchange-traded fund providers — a growing audience among crypto holders since the approval of U.S. spot Bitcoin exchange-traded funds in January.

“The current regulatory framework in the U.S. has impacted the willingness of traditional custodians from entering this market in a meaningful way. As a result, there are limited options for certain market participants to keep their digital assets in safe keeping via a qualified custodian,” explained Levine.

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In accordance with the NYDFS preapproved token or “green list,” Fireblocks’ custodian arm will initially offer custody of Bitcoin (BTC), Ether (ETH) and three stablecoins, with additional assets added under the regulator’s requirements.

The crypto custody market has seen significant growth and is poised to expand further. In 2022, the market for digital asset custody reached $448 billion, fueled by the need to safeguard investments against security breaches and comply with regulatory requirements.

Along with traditional crypto players offering custody to institutional clients, such as Ripple, Kraken and Coinbase, the industry has witnessed traditional firms seeking a slice of crypto revenue.

HSBC, for instance, has announced plans to launch a digital asset custody platform for institutional investors, focusing on tokenized securities. In 2022, BNY Mellon, considered America’s oldest bank, launched a digital custody platform to safeguard crypto assets for select institutional clients.

Digital asset custody typically involves a combination of cold (offline) storage, hot (online) storage, multisignature wallets, and multiparty computation to ensure asset security. Ripple projects that the institutional crypto custody market could reach nearly $10 trillion by 2030.

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