Crypto custody market reached $448 billion in 2022: Report
The digital asset industry reached over $3 trillion at its peak in November 2021. However, the custodial part of the market remained at the more modest mark of $447.9 billion in 2022.
These numbers are cited from a joint report on the state of digital asset custody conducted by the consulting firm PricewaterhouseCoopers (PwC) and wealth tech platform Aspen Digital. The 39-page document was published on July 11.
The report puts the number of custody service providers at 120 as of April 2023, dividing them into two broad categories: third-party service providers and self-custody solutions. Among the key institutional developments cited in the report are a rise of interest in crypto staking, resulting from the Ethereum Merge, and the appearance of nonfungible tokens (NFTs) and the metaverse, attracting institutional investors.
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The key challenge for the custody industry is, according to the report, security. Due to a lack of appropriate governance, risk management and internal controls, as demonstrated by FTX’s failure in 2022:
Another challenge for custodians lies in the area of insurance policy. Self-custody solutions do not offer insurance policies, and users are not compensated for any loss of digital assets arising from negligence. According to the report’s sources among family offices, sound insurance policies are an important criterion in choosing digital asset custodians.
The report suggests to investors a custody service provider selection approach, which includes five steps, including mapping the market, creating a grades system, performance review and other preliminary procedures.
Earlier this month, Canada’s
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