A cryptocurrency custody battle is brewing as more companies join the custodial industry. In the past few months, several startups and even established companies have made moves to establish themselves as the most trustworthy vault for crypto investors. The crypto custody market is relatively lucrative, and with these investments, it could highly boost the entire cryptocurrency market.
How does the cryptocurrency custody battle look like?
Last week, Coinbase officially bought Xapo, an institutional Bitcoin custody business. Xapo is well known for storing Bitcoins in secure vaults in Swiss banks. According to our earlier report on the acquisition of Xapo, it was highlighted that the deal was worth $55 million, which made Coinbase one of the top crypto custody companies. However, for Coinbase to have acquired Xapo, it had outbid other firms including Fidelity, which is a financial investment giant that’s also in the process of establishing its own cryptocurrency business.
It seems not all players were happy with Coinbase’s move, and a competitor has decided to soil Coinbase’s triumph. BitGo, which is already an established crypto custody provider, and now a competitor with Coinbase, published a blog post claiming that Xapo customers were not comfortable with Xapo being bought by Coinbase. “The clients calling us are concerned about the safety of their digital assets,” read part of the blog post.
BitGo seems to be seizing the opportunity to grow itself by stating that it would offer one year of free custodial services to clients. Additionally, the firm also hired one of Xapo’s executive as their chief revenue officer.
Apart from BitGo, there is also Anchorage and Bakkt, which hope to win the battle in institutional custody business. Anchorage is a startup that received millions in investments from Visa, while Bakkt is a subsidiary of the NYSE. Bakkt plans to launch its platform that will provide physically delivered Bitcoin futures, on the 23rd of September.
Although there are no clear guidelines on what exactly a cryptocurrency custody business should constitute of, courageous investors are investing millions into this space. If institutional money finally flows into the digital asset market as anticipated, those that have invested will enjoy high returns.
The winner in this cryptocurrency custody battle will be the company that can gain the trust of cryptocurrency investors by providing safe and probably cheaper service fees.
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