Capital markets News

Swiss Custody Report: only 20% of digital asset custodians support securities

digital asset custody

Last week the Swiss Blockchain Federation published a report on the digital asset custody sector. Of the 34 institutions that responded to its survey, only one in five support custody for digital securities.

That could be because most of the firms cater primarily for the crypto sector. Just over a quarter have backgrounds in traditional finance (TradFi).

“Custody in facilitating institutional adoption is crucial. In this context, it is essential to manage private keys securely,” said report author Alexander Brunner. The European Investment Bank (EIB), the most prolific digital securities issuer, says the pressing need is for conventional custodians to also support digital assets.

One fifth of the companies only service B2C clients, 26.5% work with B2B, and half target both.

The survey covered a variety of companies, including exchanges, brokers, banks, wallet providers and technology providers.

Rich custody technology options

With Switzerland’s rich crypto and blockchain foundations, seven technology offerings are available. These include global market leaders Metaco and Fireblocks. Other high profile providers include Deutsche Borse-owned Crypto Finance, Swissquote, and Deutsche Bank-backed Taurus that provides technology to at least five other survey respondents. The final two technology providers are KORE Technologies, Phoenix Systems.

Bankruptcy remote solutions are provided by 73.5% of the 34 respondents, with the reminder either offering self custody or only providing technology. Four out of five of the companies hold some kind of license.

Three trade associations supported the report . The Capital Markets and Technology Association (CMTA) focuses on digital securities and is keen to see greater adoption of its Digital Asset Custody Standards (DACS). The Swiss Banking Association believes the missing piece of the puzzle is deposit tokens. It is working with several banks exploring the topic.

The Asset Management Association agreed about the need for a payment token but was a little more reserved. It is unclear whether blockchain is sufficiently scalable. And it says many in TradFi have yet to be convinced of the benefits of tokenization when things work just fine as they are.

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