Bernstein Says Custodial Services Are the Base of Institutional Crypto Adoption

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The collapse of crypto exchange FTX has led to a greater focus on using regulated custodians, and the custodial revenue opportunity could reach $8 billion by 2033 from less than $0.3 billion. dollars today, Bernstein said in a research report Tuesday.

Crypto custody is the fundamental catalyst for institutional adoption, analysts Gautam Chhugani and Manas Agrawal wrote, adding that unlike legacy custody, crypto custody is about securing the private key, making it a more technologically-advanced business.

After FTX, Bernstein expects an increase in crypto custody penetration among existing investors and strong growth in custody services over the medium term, driven by increased institutional participation in digital asset markets.

The broker says there is a big revenue opportunity for crypto firms and banks to provide Wall Street-like prime custody, market making and brokerage services to investors entering the crypto market. -currency.

Market making is expected to increase as institutional participation grows and with it the demand for liquidity in large-cap coins and less popular tokens, the note says. A market maker is a company that provides liquidity on an asset or security.

Institutional crypto investors will also need prime brokerage services such as over-the-counter (OTC) trading desks, derivatives, loans and other structured products, and Bernstein believes this could reach a $14 billion revenue opportunity by 2033.

Read more: Bernstein expects crypto revenue to grow to around $400 billion by 2033

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