Are banks about to join the Bitcoin club?
At least, that was the number of institutions offering virtual custodian services, or the safe storage of virtual assets like Bitcoin, at the start of the year.
Investors can always store them at the exchanges they bought from with most usually employing ‘hot’ (connected to the internet) or cold wallets. Placing them under the stewardship of custodians gives additional security to those who need it, especially for institutional investors who make large purchases worth millions of dollars.
Such developments will further pave the way for new retail and institutional investors to diversify their investment strategies by acquiring virtual assets. Many jurisdictions mandate the use of a custodian service before making an investment.
We were mentioned in a DBS research report in August as a top derivatives exchange for crypto traders. Our users can store virtual assets in multi-signature HD cold wallets that are safer than internet-connected ones.
Within the crypto world, we know that many debate if custodian services are even necessary as they go against the principle of the decentralized, global and private networks made possible by blockchain technology. Removing middlemen like banks, after all, leads to efficiency gains.
As one of the forerunners, we welcome the growing interest. In the long run, we know that serious investors will look for best-in-class service providers for their derivative needs. The world of traditional finance has already demonstrated that investors who buy stocks, bonds, commodities or currencies like specialized players that understand their needs.
In short, the worlds of traditional finance and crypto finance are converging. Expect the pace to pick up with each passing day.
The article is contributed by Ben Zhou, Co-Founder & CEO of Bybit