[ M A R K E T R E V I E W | C R Y P T O C U S T O D Y ] banks that has come to fruition , a feat seldom seen in recent years despite a whole lot of lip-service to the concept .
Two years in the making “ This collaboration has been between 18 months and two years in the making ,” added Chapman . “ Standard Chartered Bank is a strategic partner of Northern Trust in a number of areas , they provide a lot of agency services for us . Alex ’ s team in Singapore and my team have had lots of discussions around opportunities in terms of incubation and ideas . “ When we assessed our overall digital asset strategy , the cryptocurrency piece is the one where we have been exploring whether to build something internally or partner with someone . As we discussed with Standard Chartered what they are doing , it seemed a logical approach to bring the two firms together and invest in a model that could facilitate exciting opportunities for both firms , without potentially having the incumbency of a bank disturbing that opportunity .” The other route for the two banks would have been to build alone – as SDX ,
“ We have seen a significant uptick in requests , some of the largest fund managers looking to create fund structures in this space .”
JUSTIN CHAPMAN , GLOBAL HEAD OF MARKET ADVOCACY AND INNOVATION ,
GLOBAL EXECUTIVE SECURITIES SERVICES , NORTHERN TRUST
and more recently BBVA have decided to do – or partner with a FinTech or retail cryptocurrency exchange and custodian . After years of considering these approaches , the conclusion from both sides was that they wanted a like-minded partner for this endeavour . “ Northern Trust understands exactly what we mean when we say institutional investor-grade custody ,” added Manson . “ Essentially , we are sharing this view that the asset class is here to stay , but also that it requires different standards . We embarked on a mission to build together . It ’ s a space where , specifically , we need to speak the same language about what is required for institutional investors , where we can build and advance it .” The final piece of the puzzle is the client demand , and according to both Chapman and Manson , it is there from hedge funds , family offices , endowments and the like . While the space is currently dominated by retail investors , should the market infrastructure – including prime brokerage , accounting , KYC , AML , administration and of course custody – evolve , it will pave the way for more mature institutional players to enter the market en masse .
Separating the noise and the facts “ We have seen a significant uptick in requests , some of the largest fund managers looking to create fund structures in this space ,” explained Chapman . “ Over the last 12-18 months , it has grown to the point where we have seen a very strong business case for a business that provides a proper institutional platform , and we don ’ t think that ’ s out there at this moment “ We ’ ll probably see an opportunity for institutional growth over the next 12 months . It ’ s below 9 % of institutional assets , but I would expect that to significantly grow as a percentage as more counterparties see it as a more secure
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