Cryptocurrency Custodian Services are Wall Street's Chance at Being Crypto-Relevant

Despite the world's top banks and financial institutions taking periodic jabs at the cryptocurrency market, a behind-the-scenes look suggests substantial interest.

With the rising number of blockchain patents, crypto experiments and cross-border blockchain remittances, cryptocurrencies are an asset class the banks can show disdain toward, but not avoid.

The CEOs of two top American banks-JPMorgan Chase & Co and Goldman Sachs Group Inc.-have been public with their reluctance toward cryptocurrencies, with JPMorgan CEO Jamie Dimon famously calling crypto a "Giant fraud" in 2017 and Goldman Sachs CEO Lloyd Blankfein citing "Crypto mania," alongside terrorism, as a market risk.

The arrival of institutional interest in cryptocurrencies has also led to the setup of custodian services exclusive to digital assets-which will store private keys, worth millions of dollars, in bank-owned safe boxes.

Although asset security and managing investor risks remain a valid concern in the digital asset sector, bullish Wall Street analysts believe the custodian market could potentially "Unlock" billions of dollars worth of bitcoin and other cryptocurrencies.

The custodian business model is lucrative to banks as well.

While private keys are physically impossible to hold, custodians can utilize everything from air-gapped, "Cold storage" crypto wallets locked away in underground caves to steel vaults and Swiss military bunkers.

For now, ItBit, Coinbase and the Winklevoss-owned Gemini are the only private players providing custody services to wealthy investors; however, only ItBit and Gemini possess custody charters.

Internationally, the Japanese financial service Nomura launched a crypto custody service, named "Komainu," aimed at high-net-worth individuals holding over $10 million in cryptocurrencies.

Coinbase Custody head Sam McIngvale insists investor interest in digital assets spurs newfound attention toward the crypto-custodian sector, given enough security and risk management is provided.